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Full text of "The Economist Vol.242, No.6697-6708(january-march)1972"

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riu' 

Fconoinist 


January i, igy 2 






\ ^Walking that election 

'* Mr Nixon isn’t counting on a 
miracle : he sent the bombeis 
ovei North Vietnam again 
because he calculates that his 
deteriniriation to win in Indo- 
china is compatible with get- 
ting re-elected in November, 
j)age 0. The reaction in 
America, page 39. The view 
from Saigon, page 30. And the 
’72 election uself starts to stir, 
pages 40 and 41. 



Going:, going, Dom 

Britain has called the blulT of 
Malta’s Mr MintofT. Will he 
negotiate realistically now ?, 
page. 27. 




^ m ^ 


Contents 


OUTLOOK 






The Middle East war 

The Egyptians say that Satur- 
day starts the open season for 
another Middle East war. 
Their prospects if they start 
pag« 34 - 


Britain 


The World 


The new year should see 
above-average economic growth 
in America, Britain, C’anada 
and France, but below-average 
growth in most other leading 
countries. Twelve pages of 
forecasts • from our corresoon- 
dents all over the world, and 
an analysis of the prospects 
for particular British industries 
and for commodities, pages 53 
to 69. Some forecasts for 
world stock exchanges, page 
3 '’- 


Volume 242 Number 6(397 


9 The message of the bombs 

11 What’s It to be, I ed ? 

12 Europe g(K*s out ol tune 
14 They have a pre.sideni 


17 Ulster: a toiigli way of lollecting the rent ; 
Televi\ion ; Wircif; Scav laivs ; Art ; 
C 0 mm unity dercl o p rn e n t 


27 International Report : You'll see hr)w 
tenibly tougli we can be ; Untied Nations ; 
.'U/icrort and Europe ; Ireland ; jinioslat'ia ; 
Indochina ; India and Pakistan ; AuUraliu ; 
I \iael 

The other war: Middle hast brief 
37 American Survey : Hard times ff>r publu 
rele\ iMon ; Who makes the pi o^’ramvies ; 
licmhs anay ; John comes lately ; Hell off 
the hook : Pti\hitn> preacher ; Enter ni^ht 
until' 

after 42 Overture for Europe : a spec ial survey 


4“> Tile logs of war ; Catour ; English in 
Ireland ; Sullioan ; Dardanelles ; Fortni>n 
business ; Antiques 


Business Brief 


Outlook '72 


This week’s 
business 


Conductor of Europe 

Mr Heath is Idling it be 
known that he means to set 
the tempo for the European 
band. It’s a discordant lot 
right now, page 12. The 
Europe Britain is about to 
join : a survey, after page 42. 
In Britain itself all the main 
national issues will be fought 
on strictly parly pK)litical lines 
in 1972. Mr Heath must decide 
which one he is going to con- 
centrate on — and it ought to be 
the economy, page ii. 


Leone^s lot 

Signor Leone has a handsome 
wife, the presidency of Italy 
and a country stuck in a 
seemingly incurable political 
crisis, ^ge 14. 


'^o World bourses in 1972 


f,3 1 he year of the Anglo-Sdxon.s ft 

.')5 Can Britain grow' 

56 Industiy gets its clianu' 

98 Nixon’s good huk 

64 Economic OutlooEs : CiVrmany, Japan, 
France, Italy, Australia, South Africa, 
Canada, Benelux, East Europe 

69 Commodities : Whai coim-s down must 
go up 

70 Britain : How many days has a holiday ? ; 

Shipping] ; CV/n ; Trade unions 

72 International : SiupriM-, surpri.se, die 
dollar’s strong ; EEC ; Pakistan ; Airlines ; 
Artrentina 

74 Investment : Will Wall Street accept direct 
rule ? ; Markets ; Preferenee shares ; 
M et ro‘(roldwyn -Mayer 


Stock Prices 

and Yields 8 1 


© The Koonomidt Newspaper Ltd, Ia»ndon. li)72 


1 ( onoiniM 


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4 


THE SOONOliUT JANUARY I, I97S 


LcHcrs 


The Bengal war 

Sir — India has now ended the artificial 
military parity that John Foster Dulles — 
later abetted by the Chinese — gave the 
Pakistanis. You suggest (December i8th) 
this will (i) draw south Asia into the 
Amcrican-Soviet-Chincse power struggle 
and (ii; may well lead to guerrilla attacks 
and unrest in Bengal. I believe India's 
action will have just the opposite eflcct. 

Now that India’s dominance in the 
region is clear — as Pakistan’s failure on 
India’s western border, while India’s forces 
were heavily involved in i^he east, has 
dramatically illustrated — there is as great 
a likelihood of further conventional wans 
between the nations of south Asia as there 
is between the United States and Mexico. 
The reduced level of conflict within the 
region should leave less room for the 
outside powers to attempt to play one 
nation against another than has been the 
ease so far. 

Bengal will no doubt be a problem. Its 
extreme poverty, the lack of an adequate 
Bengali . middle class, the difficult terrain 
and dense population and Chinn ’.s acxrss to 
the area through Burma and the disaffreted 
tribal areas of north-east India all bode 
ill. The danger was, however, greater 
before India acted than now. A guerrilla 
w^ar with popular support was already 
under way. The Pakistani army could not 
stop it, but the left communists would 
probably have replaced the moderate but 
weak Awami League leadership, had the 
struggle dragged on. This was a funda- 
mental threat to India’s integrity that it 
could not accept. 

The west should recognise and be thank- 
ful for India’s dominance in south Asia. 
It means increased stability. It leaves the 
area dominated by a liberal society led by 
a large, able middle class with whom the 
west should be ideologically at peace and 
whose interest in balancing China parallels 
both Soviet and western interests. — Yours 
faithfully, William DitAVToN, Jr 

New York 

Sir — I have read your assessment of 
India’s “ victory ” in east Pakistan with 
some bafflement. You seem disposed to let 
India off with a slap on the wrist and to 
overlook the fact that the country’s pride 
in its neutrality has been sold to Russia at 
a cheap price and for a dubious short- 
term gain. 

Let Calcutta rejoice that Pakistan has 
been wiped out as a serious competitor in 
the vahiaiblc field of jute export, and credit 
Madame Prime Minister with having 
pulled off a domestic political coup. Tlicn 
face the fact that she has opened Pandora’s 
bbx in this critical area by going to war, 


has ruined the economy of east Bengal for 
the foreseeable future and left it to be run 
by the Bangladesh government, whatever 
that title may signify in terms of capacity 
id govern. 

India’s economic situation is desperate 
enough to preclude the possibility of any- 
thing more than minimal aid to cast Bengal 
and who, may I inquire of you, will step 
in to bail out a wretched country now 
racked by war, economic disaster and 
bloody factionalism ? 

I can scarcely waif for your witty answer. 
— Yours faithfully, R. H. Wright 

New York 

Sir — While appreciating your perceptive 
article “ Into the net ” (December 1 8th), 
I w'ish to join issue on two points. 

It was not the Russians, but the 
Americans, who destroyed what you 
describe as ** the approximate balance of 
power ” existing between Pakistan and 
India. In 1954, the United States lirst 
gave military aid to Pakistan, which has 
been rightly described by Professor 
Galbraith as “ most categorically mis- 
chievous and wicked.” Mr Nehru, who 
until then was keen to have an amicable 
settlement with Pakistan even on the 
Kashmir question, felt that Pakistan was 
thenceforth going to speak from a position 
of strengtli and he rightly said at the time 
that American action had brought the 
cold war on the sub-continent. 

Secondly, it is simply not true that “ the 
main aim of Indian foreign policy since 
1947” has been “the subjection of 
Pakistan,” Rcspomible opinion in India, 
barring a few communal parties, has all 
along accepted Pakistan as a .settled fact 
after the partition and has desired a stable 
govenimciit there wdth which it could 
establish normal and friendly relations. 
Unfoitunatcly, after nearly 25 years, 
Pakistan has not been able to have a 
constitution or a representative or stable 
government. It is Pakistan that has kept 
up a hate campaign against India, and 
during the past few months cries of 
jehad ” and " crush India ” have been 
raised by the people of Pakistan with the 
instigation of their government. IVavers- 
ing the whole of India, one would not have 
seen any such posters or headlines in the 
press or heard any such cries in the 
streets. — Yours faithfully, G. L. Mehta 
Bombay 

Sir — Your article, “ Empress of India ” 
(December 18th), shows c.ynici.sm at its 
height, If India had suffered military 
reverses (say, in the west) cynics like you 
would have rejoiced at the fall of the 
“ preacher ” ; now that it has won a 
victory, you arc moralising. 

Your contention that " President Yahya 
could have been made to come to terms 
with the Bengalis by means short of direct 
Indian invasion,” with a combination of 
guerrilla war and American pressure, seems 
over-optimistic. In spite of Dr Henry 
Kissinger’s belated and angry claims to the 
contrary, the American government was 
dither unwilling to put pressure on Presi- 


dent Yahya Khan, or the sort of solution it 
was pressing for had already become a 
“ post-dated cheque ” to most of the Ben- 
galis. The government of India cannot be 
blamed for acting in haste. After all, it 
waited for eight months during which 
precious little was done to alleviate the 
conditions which ultimately pushed India 
to war. Perhaps no other country in the 
world would have accepted the burden of 
8 million to 10 million refugees in the way 
India did. You may consider the refugee 
problem as an excuse for India’s invasion 
of Pakistan ; but it is doubtful whether any 
other state would have allowed its econ- 
omic, political and social stability to be 
undermined by such a huge influx, due to 
the calculated and reckless policies of its 
neighbour, and a hostile neighbour at that. 

The American Administration’s policy 
in this unhappy episode is contemptible 
and deserves to be treated as such. When 
the iiaplcss Bengalis w'erc being butchered 
by President Yahya’s army neither Mr 
Nixon, nor any of the White House “ whiz- ^ 
kids,” iittet ''d a single word in condemna- 
tion. But when the war started, Mr Nixon 
was the only leading tesman in the free 
world to come out with statements brand- 
ing India an aggressor. — Yours faithfully, 
London, WCi A. K. Banerji 

Sir — You say (December i8th) that “Mrs 
Gandlii . . . did her reconstruction job . . . 
w'ilh a coolly masculine precision. . , . She 
has joined Mrs Mcir . . . Mrs Bandaranaike 
... on th(‘ select list of tough-minded 
women who have beaten men at their own 
power game.” 

If you keep at it, one day the blindingly 
obvious will strike even you : intellect, 
(ieterminalion, aggression (kindness, too ’), 
arc asexual characterisiic.s. 

How' about a resolution to try the road 
to Damascus next year ? — Yours faithfully, 
Hove, Sussex Rav Boreham 


Belgium 

Sir — Nothing is stranger than a foreign 
resident in Belgium writing to tell The 
Et-onomist what the Belgians ought to do 
about their national structure. Belgium is 
a nation with two communities, and an 
ovcrw’helming majority, both in parlia- 
ment and in the country, has approved 
various constitutional changes which give 
expression to this fact. It is the dwindling 
minority in favour of the status quo which 
tends to describe this process in terms of 
“ destruction,” “ tearing the country to 
pieces,” etc. Why should Mr Saunders 
(Letters, December nth) align himself so 
sclf-righteously with those fighting the 
realities of the country ? 

As for the historic references, The 
Economist, not surprisingly, is better 
informed than Mr Saunders, Belgium 
owing its independence to a consider^ 
able extent to Lord Palmerston*^ 
diplomacy ; he, indeed, prevented France 
from carrying out its jxilicy of transform- 
ing Belgium into a pro-Freneb; client- 
state, subsequent to France’* active 
support of the anti'Dutdt rcv;olutiop|ff 


8TCOND cUkxm parrAOE for THMSoomum paid at new Ttmx. N.ir 



5 


.lim SCONOMIST JANUARY I, 1972 


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management experience. The Finance Depart- 
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The Board’s area of supply is some 540 square 
miles ; it has approximately 6 million consu- 
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Further details and application form, which must he 
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Other appointments are advertised in the 
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6 


tBTTBRS 


tHE ECOWmi^ JANUARY t, igji 


movement. The traditional French 
objective, to reach the Rhine 'as their 
natural frontier, is sufficiently known. 

The policy of imposing French as the 
only language in a country where the 
majority spoke dialects of Dutch was 
justified by the nineteenth-century Belgian 
governments by the same “ desire for 
unity " as Mr Saunders now expresses. 
In effect, it tended to push forward the 
borderline of French cultural, and thereby 
socio-political, influence. 

Why should Belgium not call a halt 
to a process which has, for many gener- 
ations, irritated the nation, narrowed its 
outlook and inhibited its potential ? It 
appears that the consensus for a regional 
structure for the Belgian .state is nor only 
well-founded but also widely accepted 
throughout the provinces, if not in the 
capital. — Yours faithfully, 

Dar es Salaam F. M. Hintjens 


Gilt-edged 

Sir — In your note on the gilt-edged market 
(December i8th) you write : “ The chart 
shows how extended gilts arc looking, and 
how^ vulnerable they are to a change of 
expeciation.s.” But is the look of a chan, 
especially a chart plotted on an arithmetic 
scale, evidence ? Your chart is 3§in tall 
and 2|in wide. We prefer to look at 
a chart which places greater emphasis 
on time and is drawn on a scmi-Iogarithmic 
scale ; such a version of the FT Govern- 
ment securities index is less than lin tall 
and is 4 Jin wide. It presents a picture 
of an orderly progression from June, 1970, 
in which each rise has been followed by 
a comparatively long period of steady 
price. 

Charts arc like pastry. The cliart maker 
can roll it out any way he likes. The chart 
you used has been rolled out thin from 
north to south and looks over-extended. 
Our chart would be rolled out from east 
to west anti give quite a different 


Oil in North 
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surveys the irxlustry's problems from 
pipelines to pollution and forecasts 
its prospects in 1972. 

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covering 150 countries. An ennuel subscription 
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Singla copies £3 each. Details from the 
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impression. But all our .scmi-Iogarithmic 
charts are rolled out to a standard thick- 
ness ; arithmetic charts are made, by the 
choice of .scale and, in the rase of point 
and figure, by the sii:e of movement chosen 
for plotting, to show different degrees of 
extension and vulnerability.^ ‘‘Yours faith- 
fully, A. G. Ellinger 

Cambridge Investment Research 


Gold myths 

Sir — You say (Dcci^mber 18th) that the 
increa.se in the monetary price of gold ha.s 
done nothing for gold shares. You fail to 
note that the new monetary gold price of 
$38 is below' the j)rkc which ha.s been 
received by gold producers for the past 
nine months, and that it had been generally 
known for the past three months that this 
would be the case. (Conceivably, this could 
account for the share market’s lack of 
response to the announcement. 

You point out, correctly, that monetary 
gold holdings are etpiivaleni to about 30 
years’ commercial consumption at the 
current rate. Unfortunately, in y(jur 
anxiety not to disregard statistics, you 
appear to forget the rules of logic. For 
the statistic quoted is rclcvam only to the 
extent, if any, that central banks may 
decide actually to sell off their gold hold- 
ings. 

As to the probability of .such sales, the 
following facts may assist in arriving at 
a realistic judgment : 

(1) The monetary crisis of March, 1968, 
was precipitated by the unwillingness of 

entral banks to continue sales of gold 
to the commercial market. 

(2) The monetary crisis of August, 1971, 
was precipitated by the unwillingness of the 
United States to continue sales of gold 
to other monetary authorities. 

(3) In September, 1970, the IMF replen- 
ished its holdings of currcncie.s of 12 
member countries in a total amount of 
$325 million. Members were offered a 
choice of payment in either gold or SDRs. 
Nine members opted for a straight gold 
payment ; two members cho.se SDRs ; one, 
the United States, originalh requested a 
straight gold payment, but later modified 
the request to »$ioo million in gold and 
$21.9 million in SDRs. 

(4) In a similar currency replenishment 

excrci.se in April, 1971, involving 13 
members for a total amount of $320 
million, ten members requested gold and 
three members SDRs. — Yours faithfully, 
Chelmsford, Essex P. D . Feli.s 

Christmas postal services 

Sir — Y ou appear to be surprised because 
the post ofticr this Christmas, as in 
previous years, followed normal commer- 
cial practice in adjusting to the level of 
business demand by cither closing offices 
during the holiday or reducing services 
(December 25th), 

In fact, despite difficulties caused by 
very restrictive transport, 10,000 of the 
15,000 telephone operators on duty on a 
normal Saturday were at work on 


Christmas day coping with the telephone 
traffic. The reason w'hy wc advise our 
customers in their own interest to dial 
calls direct whenever possible is because a 
large number of calls (over 20 million t 
during the year) which could be dialled by 
customers are put through an operator* 

Oi the postal side, the post office has 
never as good as admitted “ that letters 
posted over the Christmas period will 
fake three times as long to arrive. . . In 
fact, thanks to the co-operation of cus- 
tomers in working to recommended |X)sting J 
dates — all of which include margirus to f 
cover (Hissiblc weather or transport 
hazards — virtually all the mail w'as deli- 
vered by Christmas, much of it arriving 
almost as quickly as in normal times. 

You arc also wrong in saying that no 
inland telegrams would be delivered 
during the holiday. Staff were on duty 
throughout the (Christmas period to main- 
tain an emergency telegram service.— 
Yours faithfully, T. Dawson ^ 

Director of Public Relations 

London, Wi 


Witch-hunts 

Sir —You had a piece on Mr Dick 
Tavernes victory after the witch-hunt to 
which he had been subjected in his 
constituency (December nth) in which you 
said that the local Labour parties have 
.sensibly refused to permit a witch-hunt to 
lake place, and that this ha.s been good for 
the Labour party and for the cause of 
parliamentary democracy. 

By the same token, I hope your views • 
will extend to any Conservative anti- 
rnarket MP who might be w'itch-hunted. 

Let us hope! that the Conservative party 
and Conservative associations are sensible 
about it and show their concern for 
parliamentary democracy by having no 
witch-hunts either. A statement to this 
effect by the chairman of the (iOn.sc*rvaiive 
party would, I should have thought, have 
doiii. much to allay the .suspicions aroused 
by his recent letter to con.stituencic.s con- 
cerning the Chclmcr re|>ort on the adop- 
tion of candidates. — Yoijr.« faithfully, 
London, EC 2 Jim Bourlet 

Those earthlings I 

Sir— Said the observer on Mars to the man 
in the moon : “ Have you noticed how 
strangely those little men down there on 
earth have been behaving lately ? Lhitil 
recently they were always struggling to 
avoid a devaluation of their c.ui 1 encics, 
each one of them proud if his money was « 
i.onsidered strong, and feeling dishonoured 
if he had to devalue. But now every one of 
them !s .srreaming to his neighbours : 

‘ Pray I My money isn’t worth all that.’ 
Tell me, do you think they are becoming 
wLser than before — or merely just a bit 
more stupid ? ** 

At that moment, unfortunately, a total 
eclipse hid from sight the silent and mock- 
ing smile of that wise old man,, in 
moon.— Yours faithfully, G. S. 

Cannes 



tyife' -BKiONOHIST. JANVARY I, 1973 


7 


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B 


THE ECo'soJiltST JANTARY 1 , 1972 

If you want a man to do 
afust-dassjob, 

give him a £ust-d^ tidcet 


Economy class travel looks like sound company policy. 
On paper. 

In practice, just how sound is it? 

Think of what you’re askin^our man to do. 

Make decisions that could affect the future of your 
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He’ll need to be as rested and relaxed as possible. 

Ready to go into action as soon as he reaches his destination. 

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takes good care of you. 



llu' 

Economist 


January i, ig'j2 



The message of the bombs 


Those American bombers that started flying over North 
\'ietriani again last Sunday were President Nixon’s new 
year greeting to his critics at home. So long as he went 
on pulling his troops out of South Vietnam, and so long 
as the number of American lives lost in action went on 
dropping and the real shcxning was confined to (Jambodia 
and l.aos, the American opposition lo the war seemed lo 
be quiescent. Mr Nixon may noi be getting out of 
Vietnam as fast as many people say they would like, but 
he is visibly edging towards the door. But (‘very now and 
then he gives the protesters an excuse to occupy the arm 
of the Statue of Libi‘rty or a bit of Lafayette Square, 
The latest bombing strikes, like the Cambodia operation 
in J970 and the Laos offensive last March, gave the 
critics the chance to flog the war back into life as a 
domestic political issue. Over th(‘ past week, all those 
Democrats with one eye on November’s presidential 
election have been jumping to their feet to attack what 
Senator McGovern labelled a shocking escalation ” of 
the war ; and even Senator Humphrey latched on to the 
raids as a reason t(i commit himself to a pt^licy of total 
American disengagement from south-east Asia (s(;e page 

39 )- 

But the rhetoric of Capitol Hill should not be allowed 
to obscure what is actually going on in Indochina. It may 
turn out to bf‘ true that this week’s bombing was on a 
scale that has not been seen since late in 196B, when 
President Johnson called off his aerial offensive against 
North Vietnam. But the Americans called a halt to the 
bombing on Thursday after four and a half days (see 
page 30) ; and it would be wrong to talk of a 
reversion to the Johnson policy. The latest strikes are not 
a radical departure from Mr Nixon’s policy of phased 
withdrawal. In fact, they demonstrate the new pattern of 
the Indochina war — a, war in which the real fighting is 
going on outside South Vietnam, in Laos and Cambodia, 
and in which the American role is to provide planes 
rather than men. This may prove to be the basis for a 
permsanent holding position in Indochina, Mr Rogers, the 
Secretary of State, made it clear on the eve of the bomb- 


ing strikes that the United States would keep the option 
of launching acTial attacks indefinitely ; and now North 
Vietnam knows that it has lost the immunity it thought 
it had rowon in 196H. 

NU Laird, the Secretary of Defence, says that the 
North Vietnamese had contravened llut tacit agreement 
that is supposed lo hav(? brought an end to bombing 
operations against North Vietnam in 1968 by shtxyting 
down reconnaissance planes, shelling Saigon and trying to 
open up an infiltration route through the demilitarised 
zone. Many American observers, including Mr (^lark 
Clifford, the fomier Defence* Sern*tary, hav<‘ publicly 
doubted wJiether this agreement ever existed. Whether it 
did 01 not, Mr Nixon’s real motives for ordering the 
bombing l)ave to be .sought elsewhere. 

The North Vietnamese build-up 

I'o begin with, the Americans were alarmed by the recent 
('ommunist offensives in (’ambodia and in Laos, where 
the North Vietnanuvse have overrun the Plain of Jar's 
and are now threatening the Central Intelligence Agency’s 
ba.se at l.ong Cheng. The, communists in Laos have been 
operating in greater strength than usual, using tanks and 
heavy artillery. The s(^asorial ebb and flow of war in 
Laos, of course, is never quite as dramatic as ii looks. 
Throughout Indochina, the communists tend to make 
their greatest gains during the dry season, when they can 
advance comfortably across the hills and paddies, and 
the government forces tend to recoup their losses during 
the wet season, when control of conventional communica- 
tions (road, river and air) gives them a decisive military 
advantage. On the other hand, the fact that the North 
Vietnamese launched their Laos offensixe much earlier 
than usual sugg(\sted that they may be planning a follow- 
up. This could take the form of ;in assault on relatively 
expos'd towns like Pleiku in the central highlands of 
.South Vietnam or, easier still, an attack on Phnom 
Penli. The idea that something of this kind was in the 
offing may have made the Americans act. 

But there an* other equally important factors. One is 



10 

the significant build-up of North Vietnamese air power 
in recent months. The diminutive North Vietnamese air 
force has never before presented any real challenge to 
Ameriran supremacy in the skies over Indociiina. Until 
recently, North Vietnam had only about 165 combat 
aircraft, all but ten of them fighters. But there are now 
reports that another 200 Mig fighters have been moved 
fmm China -to North Vietnamese airfields, and that the 
cjommunists have greatly expanded their anti-aircraft 
system. This means that more American l)ombers arc 
going to be shot down over Laos ; and in fact the loss 
of five Phantoms last week was probably one of the things 
that stung the Americans into launching ihe new offensive 
against North Vietnam’s growing air power. 

Trying to keep 1972 quiet 

But the crudal thing is timing. Next month Mr Nixon is 
due to go to Peking, and by March the whole process of 
primary elections and campaigning leading up to the 
American presidential election w'ill really be under way. 
Mr Nixon will want to avoid getting liimself tangled up 
in a major military operation in Indochina at the moment 
when he is hoping to trade concessions with CJhou Kn-lai. 
He will also want to avoid the embarrassment of a major 
communist ofTensi\c, another Tet, just when the presi- 
dential election is starting. An effective bombing campaign 
at this stage could scat several purposes. It would place 
Mr Nixon in a stronger bargaining position if there is 
any deal to be done with the Chinese! over Indochina, by 
showing that the Americans still have some room for 
manoeuvre and are still capable of responding in force 
to a North Vietnamese offensive. It may also help to 
avert a communist offensive later by disrupting move- 
ments of supplies and reinforcements. 

Of course, there are some [X!oplc who argue that the 
North Vietnamese have lured Mr Nixon into a skilfully 
baited trap and that their early offensive in Laos was 
designed to provoke the kind of American response that 
might jK!rsuadc the Chin(!sc to cancel the Nixon trip to 
Peking, Certainly, the Vietnamese communists are not 
happy abemt Mr Nixon’s overtures to Chou En-lai, or 
about the fact that the Americans and the Chinese 
appeared on the same side during the Indo-Pakistani con- 
flict. This was confirmed w^hen the communist parties of 
Indochina decided to hold a joint meeting to proclaim 
their readiness to continue the war on the day that Mr 
Nixon is due to arrive in Peking. But the tnith of the 
matter is that Mr Nixorfs bombing campaign is not 
enough to persuade the Cliincse to call off his trip, unless 
they have already decided to do that and arc merely 
casting around for a suitable pretext. 

Anyway, it is very hard to see how the Chinese and the 
Americans could arrive at a secret agreement that would 
change the situation in Indochina in any fundamental 
way. This Is not a war that is going to be ended at 
the conference table until one side is ready to concede 
the battle, or the great powers arc agreed on a common 
strategy. The Chinese and the Russians, even if they 
wam^ to, cannot bring pressure to bear on Hanoi for 
any compromise if Hanoi can turn refund and blast them 
for deserting the chief cause that the communist world has 


worked for in the past decade. That also goes for, the 
Paris peace talks. It is nonsen.se for U Thant to say that 
the bombing strikes have put paid to the negotiations 
in Paris for the moment. There has never been any serious 
negotiating in Paris since rhe.se meetings began three 
years ago, and the Americans pulled out of the .slanging 
match three weeks ago until further notice. 

The Indochina war is still going to be won or lost 
on the ground. At the end of it, this part of Asia may 
well kK)k like a patchwork quilt, with the government 
forces holding on to most of South Vietnam and the 
most densely populated areas in (Cambodia (the south- 
eastern area around Phnom Penh and Battambang in 
the west) and Laos (the towns along the Mekong valley) 
while the communists cling to their bases in the “ tri- 
border ” region where Laos, Cambodia and South 
Vietnam meet. It is over this thinly populated area — much 
of it now empty of people — that most of the past year’s 
bombing has been done. There could be a major com- 
munist offensive in South Vietnam after the American 
presence has dwindled to a tiny garrison. But then the 
communists would virtually have to start from first bas(*. 
The insurgency in South Vietnam has assumed the form 
familiar in the late 1950s and early L‘j6os — terrorist 
attacks on government personnel, and intimidation of the 
civil population — with the significant qualification that 
many of the Vietcong cadres, cut off from their outside 
support, have lost heart. A new offensive would look 
more than ever like a foreign invasion, waged by fresh 
North Vietnamese divisions shunted in through Laos or 
("amlxxlia. And for the moment the physical capacity of 
the North Vietnamese to launch that kind of operation 
ha.s been diminished by floods, loss of agricultuial produc- 
tion, dwindling manpow^er resources and the kind of 
fatigue that must eventually set in even in a lough little 
dictatorship like North Vietnam. 

The reason for being there 

These arc becoming home truths to those who have 
followed the course of the Indochina war. But the 
American weariness is such that many American politi- 
cians (including some of those directly responsible for the 
conduct of the war under previous administrations) show 
a curious myopia when confronted with them. It is under- 
standable that some Americans should have half-forgotten 
their original motives for getting involved in the Vietnam 
war, and appear tongue-tied when it comes to talking 
about the principles they then believed themselves to be 
defending. And maybe no one would have been ready 
to countenance the war if it had been possible at the 
start to visualise the burden ol human suffering, the 
billions of dollars and the domestic crisis that it was 
going to entail. But it has happened. The Americans have 
reached the stage where they have a much better than 
50-50 chance of disengaging from Indochina while 
leaving behind political structures that will not collapse 
in their wake like a house of cards. That is a pretty modest 
achievement by comparison with their original aim of 
helping to build democracies in south-east Asia — an aim 
that their own withdrawal is steadily making more remote. 
But it is reason enough for holding on. 



11 


i^wmm mfX^Mm^^ JjM|Xfl|Hr 1^ 1^8 



What's it to be, Ted ? 

Mr Heath made 1 971 the year for Europe. He needs to 
make 1972 the year for the British economy 


The most frequently-heard criticism among Tory back- 
bench MPs about their Government is that it is not 
greatly interested in politics. Backbenchers, unbimiened 
by the distractions or fascinations of office, put great 
^ store on politics. It would, of course, besnonsense to 
iniggest that there is unrest among the Tories as a result 
of the Government’s performance in 1971. Indeed, they 
have been immensely sympathetic — some of Mr Powell’s 
supporteis might say supine — ^in their acceptance of the 
Government’s difficulties. But apart from Mr Heath’s 
own glittering success on the common market — which 
alone made 1971 a momentous year — the Government’s 
^ performance was far short of brilliant. 

Of course, the events of the year did not help. The 
Government did not actually make Rolls-Royce and 
Upper Clyde Shipbuilders go bust, or divide Ireland. It 
did not even start the wages-priccs spiral ; it did not stop 
h, either. But the Tories would be making a very grave 
error if they sat back and blamed their consistently poor 
ratings in the opuiion polls and their dismal electoral 
record during the year on the mistakes of their 
predeoessons or on the intractability of Ulster, mounting 
unemployment and the unpopularity of the common 
market cause. The fact is that, again with the exception 
* of the market issue, the Government did not have the 
energy or the inclination to take on any other political 
atgiunent in the country. Action not words is a fine 
slogan for a government, but when that government is 
forced to backtrack on many of the actions it had 
intended — as Mr Heath’s had to do in 1971 — ^words can 
come in mighty useful. There is a simple test Tory MPs 
could make of their own and the Government’s failure 
in that respect : they should ask the members of their 
local associations whether they have a clearer under- 
standing of the Government’s philosophies and policies 
this week than they had a year ago. It will be a rare 
Tory indeed who can give an honest yes to that. 

There is much to admire in Mr Heath's approach 
to his life and his job. He pursues his private interests 
— sailing, music, actually conducting a symphony 
orchestra — ^with an openness which makes him, if any- 
thing, even less comprehensible as a personality than 
ever to the majority of the electorate. He knows that by 
'* now, and certainly the image-makers among the Tory 
managers, who once suggested he might buy a racehorse 
or two to endear him to the British public, have long 
since abandoned the attempt to change his public persona. 
To a man of such temperament nothing can be more 
galling than to see Mr Wilson survive every twist and 
turn ^ the past year with a greater public acceptability 
in t^ polls than his own. To Mr Heath that is not 
poGtics but gimmickry. Some would argue, of course, 
(m tbe 'evidence of his visit to the troc^ in Ulster before 


Christmas, that Mr Heath’s attitude to political 
^mmickry is proving as adaptable as his policies towards 
lameduck industries. Anything was possible in 1971, but 
that seems inherently unlikely. Would Mr Wilson ever 
have allowed himself to be photographed wearing a 
flack jacket in any part of the United Kingdom f 

Any evidence during the coming year that Mr Heath 
has stopped confusing the art of politics with the artifices 
of political gimmickry will be welcomed by the Tory 
party. For it is going to be a tricky political year. One 
of the more interesting aspects of politics las' year was 
the way the word consensus — ^which Mr Heath had 
been so hysterically accu.<(ed of breaking in 1970 
— suddenly dropped out of the vocabulary of political 
abuse. The reason is simple enough : as the Government 
has been forced back to a more central position than it 
wished to adopt on the social services, prescription 
charges, aid to industry and so on, Mr Wilson and most 
of the Labour party have been busily detaching them- 
selves from many of the policies thc> were happy, or 
forced, to adopt in government. The result is, therefore, 
that on the three main political issues of 1972— the 
enabling legislation to join Europe, Ulster and unemploy- 
ment — there is no consensus between the two major 
parties, and it has been broken largely by Labour. 

And a worry for Roy 

The disturbing prospect for the coming year is that 
those three issues are going to be fought entirely on 
party lines ; and there will be few subsidiary issues — 
certainly not Rhodesia, education or housing — ^which will 
not be fought on party lines cither. That will make 1972 
very much the year for party politics. It is more than 
probable that Labour, which usually prefers an internal 
quarrel to anything else, will let the Government off the 
hook much of the time. But Labour is too unreliable in 
every way for that to be counted on, and, given only a 
reasonable desire for party unity up to, say, the summer 
recess, most of the ammunition will be in Labour’s lockei . 

The party battle over Europe could start very soon 
after Parliament returns on January 17 th, when Utere 
could be a debate on the fisheries agreement on the 
Thursday. That would simply be a foretaste of what is to 
come on the enabling legislation, for even if Mr Jenkiits 
and his pro^arket colleagues were to accept that the 
Government had a reasonable agreement on fish, they 
are committed to opposing all the coasequential legislation. 
Such a switch may not do Mr Jenkins much good with 
the public and he cannot be greatly looking forward to 
political life in 1972. But it wffi not do the Government 
any good, cither, for on the basis of the vote on the 
principle of joining the EEC on October 28th, the 
Government theoretically would not have a majority. 
Scune of the 39 Tories who voted against entry then 


la 


K«ni ttoNoiitit jiiWiWV ipfif 



have already said they will support the Gkwenunent in 
future ; but the Government must always be certain 
of getting its business through the Commons, and not 
only is there going to be a great deal of arm-twisting 
there may have to be some rather squalid deals as well. 

Of course, it will never be put like that. But it is 
perfectly posable that on some stages of the European 
legislation the Government will bclic\T that it desperately 
needs the votes of the eight Northern Ireland Unionist 
MPs (only two voted for the market in October). The word 
deal will never be mentioned, but the Leader of the 
House, Mr Whitelaw, and the chief whip, Mr Pym, 
will be happier, to put it at its kindest, if there is no 
change in the Government’s Ulster policy which is 
likely to make that eight abstain or vote against the 
European legislation. But even if the overlapping politics 
of Europe and Ulster never reach that depth, Ulster could 
easily become an even more difficult political problem 
for the Government than it is now. Unless the IRA 
campaign is broken fairly soon, which does not seem 
loo likely, the Labour party is certain to oppose the 
Government’s policies even more stridently, and the 
Government will only be able to meet that challenge at 
the risk of further alienating the minority in Ulster. 
That may not d(t the Labour party much good in the 
long term, but that will not .stop Labour trying to make 
life impossibly hard for Mr Maudiing. As things stand 
already, the middle ground between the Government 
and the Labour party on Ulster is merely the solitary 
plinth occupied by Mr Wilson — with Mr Callaghan not 
quite certain whether to be half on or half off it. 

Of course, most Labour MPs will indignantly deny 
that they would play party politics over Ulster. All 
will deny that they would play party politics with the 
unemployed ; but they will, and while unemployment 
is rising it will be regarded by both parties as the issue 
which is likely to settle the next general election. The 
Economist has argued that the present level of unemploy- 
ment is unacceptable for long m a civili.sed society, but 
that now that it has been reached it provides the Govern- 
ment with an opportunity for an equally unprecedented 
sustained rate of economic growth. That is true so long 
as the Government keeps its nerve. Unfortunately, the 


recent indications have been that much of the Govern- 
ment, for a mixture of social and political reasons which 
would be difficult to disentangle, would be happy to 
lose its nerve if only it really knew how. What seems 
certain is that anyone with a plan to reduce unemploy- 
ment by 10,000 a month would have heads nodding 
sagely around the cabinet table today. Mr Heath should 
lock his do6r to all such callers. 

Remember Supermac 

It is now fairly well established that a modem prime 
minister can only pick up one principal issue at a time ^ 
Last year, Mr Heath rightly concentrated on Europe 
this year he has the choice of Ulster or the economy. 
The temptation, and probably a good deal of well- 
meaning advice, will be for liim to concentrate on Ulster, 
for that is where people— British troops and innocent 
civilians — are being killed. The temptation should be 
resisted. Mr Heath will no doubt be reminded how Mr 
Macmillan picked up the Cyprus problem to the ejcclu- 
sion of all else and solved it- -or moie or less solved it so 
far as the British were concerned. But neithei Mr Heath 
nor anyone else is going to more or less solve the Ulster 
problem in this Parliament, never mind this year. And 
Mr Heath will remember the damage done to the 
Macmillan government — and particularly its economic 
policies — by its leader’s concentration on Cyprus. There 
is nothing much that Mr Heath could achieve in Ulster 
that Mr Maudiing, or, if there is a Government reshuffle, 
someone like Mr Robert Carr could not achieve equally 
well. 

The sensible thing for Mr Heath to do both for his 
Government and the country is to devote most of his 
energy and willpower, of which he has an abundance, 
to ensuring that another opportunity for economic growth 
is not thrown away for lack of nerve or piolitical nous. 
All governments find that they cannot do many of the 
things they wish. But the prime minister of this country, 
if he devotes his mind and heart to what he most wants 
to achieve, has a leverage in the political system, among 
industrialists, in the City, with the public and even with 
other governments which no one else can ever have. Mr 
Heath should use that leverage on the economy in 1972. 



Europe goes out of tune 

The Europe Britain is joining has several adequate conductors. 
But the players need a lot of rehearsal 


A year to go until Britain’s formal entry into the common 
market, and the political music on the continent is par- 
ticularly discordant. Belgium has gone weeks without a 
government ; Italy has come within an acc of political 
breakdown over choosing a new president ; Holland’s 
latest coalition is apparently losing, like its predecessor, 
the old control over wage inflation ; Herr Brandt went 
oR to Key Biscayne with one of his coalition partners 


muttering about resignation ; and, for those who believe 
in fate’s hidden hand, President Pompidou was only 
one step ahead of lieing unintentionally shot up in his 
helicopter by a group of hunters indulging In theit 
Christmas rite of devastating the French countryside. It 
is when politics across the Channel looks a bit like comic 
opera that the true British anti-marketeer finds loudest 
tongue: we cannot beat the Europeans, maybe, but, 


fitB HCONOJftST ^ANtMlty I) t97B 


«3 


God for Harry, England and St Geoige, let’s not join 
them either. 

It is an unhappy contrast to the preten»ons which 
Europe’s major leaders carried with them to their 
separate meetings with the Pre»dent of the United States 
at a time, Mr Nixon said to Mr Heath as he planted a 
tree in ^rmuda, “when a new Europe and a new 
America arc emeiging.” The political uncertainty in .«> 
much of western Europe looks equally strange when 
set alongside the anrbitions Europeans have for their 
continent after Britain joins, a formidable catalogue of 
change and hope which is discussed in the survey appear- 
ing in this issue ci The Economist after page 42. 

Who docs speak for Europe ? 

The contradictions are likely to persist. M. Pompidou 
claimed to speak for Europe when he met Mr Nixon, yet 
he had barely got home before he was denouncing tho.se 
Eurof>ean5 who would destroy in its present form Europe’s 
major achievement of integration so far, the common 
agricultural policy. M. Pompidou was a legitimate 
mes.senger of European power when he went to the 
Azores with the blessing of his two equals, Mr Heath and 
Herr Brandt. But by what “ European ” right does he 
speak in defence of a system of agricultural protection 
which the governments of Germany, Italy (see page 72) 
and Britain and many Frenchmen, in their different ways, 
questioned during the closing weeks of 1971 ? Even the 
case with which a European and an American president 
cut the dollar knot looks freakish when there is added 
on the French afterthought that nothing should be done 
to reform the international monetary system until 
America gets its economy straight — ^which may mean not 
for another two or three years. So what were those five 
wrangling months at the end of 1971 lor ? 

Mr Heath will soon be meeting M. Pompidou and 
Herr Brandt once again, carrying one stage further 
the modem manner of European policy-making through 
frequent meetings among the men who matter at the top. 
Perhaps by the end of this new year, when Britain’s 
Parliament has agreed to the ratificadon of the treaty 
of accession to the European community, a solemn summit 
of all the enlai^ed common market’s heads of government 
will meet to decide where Europe should go next. But 
beneath the smiles and apparent glamour of these 
meetings 1972 will probably not be any easier a year 
for pro-Europeans to explain away than 1971 was. 
Indeed, even through the tumult of an American election, 
the and-market aigument will be pressed home that 
Britain is forsaking an Atlandc allegiance at the very 
moment when things in America arc at last about to 
look up in favour of a Europe whose internal divisions look 
increasingly incurable. 

Britons, pro-European Britons in particular, should 
therefore be very clear in their minds what it is they 
are about to do. Mr Heath himself will need to be 
careful — in a Europe whose monetary, farming and 
eastward-looking policies are growing causes of internal 
dilute — that his own declared bias in favour of a larger- 
than-life British presence in the polidcs of Euroj^ does 
not make 'the other Europeans ask him who he thinks he 


is. The impression has got alwut that Mr Heath’s inten- 
tion is not only to maintain a pretty cool distance frmn 
the United 55 >tatcs. It is .said <(< lx* also, fiom the moment 
of entry next year, to start knocking the Europeans’ heads 
together in order to make .sure that they follow .sen.sible 
poliicie.s. 

It is right for a British prime iiunistcr to assert British 
.self-interest, and to appeal to European common seasc. 
'I’he danger is that, put the wrong way, the.se things may 
come 'to be seen as an unfortunate form of Biitish arro- 
gance called hcaDhism. The rcalidcs that havx* called for 
involving Britain with Europe are as down-to-earth and 
unspectacular as 'they ever wen*. Going nt alone makes no 
.sense in a world of 'trading blocks which seem condemned 
to more, not less, protectionism. Britain’s economic 
interc.st in the Commonwealth has declined, and is .still 
declining. America, even a recovering America, is no 
replacement for the Commonwealth or foi Europe in 
economic terms if only because neither hou.se of the 
American Congress will ever come within shouting 
distance of enacting the legislation that would be needed 
to include Britain in a preferential Adamic trading area. 

In polidcs Euiope’s coirtinental nations arc wedded to 
coalition systems which are mercifully foreign to Britain. 
But the fact that Herr Brandt’s polidcal survival depends 
on the electoral weakness which persuades his government 
partners, the Free ]>mocrats, not to break their coalition 
with him is not affected by whether Britain goes into the 
community or stays outside it. The same thing is tnie of 
the fact that M. Pompidou lias earned the almost 
unprecedented admiration of I'Venchmen which he now 
enjoys by pursuing a quiet but entirely self-interested 
international policy. These arc tliing.s that Britain will 
have to live with in the 1970s whatever the form of its 
connection with Europe. Even if the ups and downs 
of European politics were to destroy the European com- 
munity, what matters is that the British should have a 
.say in the manner of its making or its unmaking, not be 
left gaping outside. 

That farm policy 

The alterations needed in Europe’s common farm 
policy imply neither its destruction noi that Britain should 
refuse to be involved with it. The basic aims of that 
farm policy have been the right ones for Europe ; they 
need to be modified, but, in an age of rising world food 
prices, they could be the right ones for Britain by the 
end of the 1970s. The present rules of the common farm 
policy are not sacrosanct. But M Pompidou, fighting 
for his comer, is justified in arguing that if Europe Is 
ever to find a common purpasc in monetary, defence and 
foreign policies 'the occasion of a new dollar parity or of 
British entry should not be used to puli down thought- 
lessly what integration already exists in the community. 
The next stage is to see how far the various national 
interests of western Europe can be brought together to 
expand what Europe has in common : it may turn out 
that the easiest progress will be in social policies. But 
Europe is not a power that Britain is joining to direct 
its ways ; it is somethii^ that has still to be concerted 
politically. Anything else is mere presumption. 



4 



TKB iadrtdmsT 

They have a president 

But Signor Leone's tiny majority still leaves the Italians 
with their real problem unsolved 


The Italians finally managed to elect a new president 
before Christmas. But only just. The 23rd and final ballot 
was held on Christmas eve. Out of it Senator Leone, a 
Christian Democrat from Naples, emerged as the successor 
to President Saragat for a .seven-year term. On Wednes- 
day Signor Leone took his oath of office and appealed to 
parliament and the nation for unity. 

His call for national unity was needed. The election 
was unusually bitter, even by Italian standards. During 
one ballot senators and deputies almost came to blows. 
The election developed into a direct confrontation 
between the Christian Democrats, assisted in the closing 
stages by the Social Democrats as well as the Republicans 
atid others, and an alliance of Socialists and Communists. 
Both the main groups changed their candidates when the 
original men proved to be unelectable, and it was only 
on the penultimate ballot that Signor Leone actually 
emerged from the shadows to collect his side’s votes. He 
eventually scraped home with 518 votes — 13 more than 
the required majority — against 408 for the left-wing 
alliance’s Signor Nenni. Since then there have been 
charges that his tiny majority included votes from the 
far-right-wing Italian Social Movement, the MSI. 

What is certain is that the alliance between the Christ- 
ian Democrats and the Socialists, which has formed 
the basis of every Italian government since 1963, has 
been put in jeopardy. On Wednesday President Leone 
invited the prime minister. Signor Colombo, to continue 
in office with his centre-left coalition government until the 
next parliamentary election in 1973. Signor Colombo 
will try to hold the coalition together. But whether 
it will be able to get through the economic and social 
reforms which arc now urgently needed in Italy is very 
much in doubt. Apart from a reform of the tax 
system and the continued need to reduce the size of 
the bureaucracy, housing and schools are badly in need 
of money. There is also the perennial argument about 
whether the best way to cure the stagnation of the 
economy is really to pump in more government money. 

There are quite a lot of people in Italy who argue that 
what the country now needs is a strong man to put 
through the necessary reforms : that the compromises 
and delays of the party system will never .solve the basic 
problems. Certainly the continued rise of support for 
the right in recent elections, including the new strength 
of the MSI, suggests that many Italian voters feel that 
way. Even if a stronger president is not the answer, 
another proposal is that a centre-right coalition should 
replace the centre-left, with the Socialists leaving the 
government and the Liberals coming in. After all, the 
centre-left experiment has had nearly eight years to justify 
itsdf, and it has not yet done most of what it set out to do. 
& the argument for a new ripening to the right will 


continue to seem attractive, especially to those Christian 
Democrats inside and outside parliament who do not like 
the alliance with the Socialists. 

Nevertheless, Italian politics remain even more the art 
of the possible than most other people’s. On the face of it 
a centre-right coalition of Christian Democrats, 
Liberals, Social Democrats and Republicans would have 
a nominal majority of 36 in a lower house of 630 mem- 
bers. But the Social Democrats, and quite a lot of Christian 
Democrats, do not want to serve with the Liberals, and 
without the 31 Liberals the centre-right’s majority 
virtually disappears. Signor Colombo is aware of this. 

So Is Signor de Martino, the Socialist deputy prime 
minister. Before parliament reassembles the Soci^ists are 
to ask for a “ clarification ” of Signor Coh mbo’s pro- 
gramme as the implied price for agreeing to go on serving 
in his government. But Signor Colombo knows that, 
although the Socialists like to threaten resignation, they are 
generally very reluctant to carry out the threat. 

The spreading disillusionment 

The norm^ rules of Italian politics are compromise and 
conciliation between the factions, including the factions 
within the parties. That is one reason why the presidential 
balloting took so long to work itself to a decision. The 
real danger for the Italian political system now lies not 
so much inside parliament as in the minds of the Italian 
people. There are signs that, like Frenchmen in the 
Fourth Republic, many Italians are ceasing to expect 
serious politics from their politicians. The unedifying 
spectacle of the presidential balloting on television cannot 
have improved the politicians’ reputation. President 
Leone’s call for unity showed that, if the party men are not 
aware of the public mood, the new president is. 

The quality of the man who got elected on Christmas 
eve is one consolation for the Italian voters. President 
Leone was speaker of the lower house for eight years, and 
has tvrice been briefly prime minister. He also has a good 
legal mind, and a justified reputation as a moderate man 
and a mediator. He has never aligned himself with any 
particular grouping among the Christian Democrats. That 
will be a help as he tries to preside over the next stage 
of Italy’s unsolved crisi.s. But unless the centre-left experi- < 
ment can justify itself very soon, its failure will require 
either a move to the right, or a longer leap to the left that 
would oblige the government to seek support from the 
Communists. The Communists’ alliance with the Social- 
ists in the presidential voting was their declaration of 
availability. Their failure to get the left-wing candidate 
elected was the evidence that a majority of Italians still 
need to be convinced that the Communists are prepared 
to work loyally inside the democratic system. Pri»Went 
Leone will have his work cut out. 


tm « 06 N 0 wmr jawahv i, 



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Machines as technology, machines as art, is the life of 
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Paid-up capital increased 
after successful first year 

1971 1970 

( 1 2 months) ( 5 months) 

£000 £000 

4,310 2,006 

2,554 2,500 

6,864 4,506 

112,629 22,243 

47,337 10,004 

121,113 27,151 

321 15 


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BANK LIMITED 

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OWNED BY 

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SHARE CAPITAL AND 
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SUBORDINATED LOANS 
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TOTAL SHAREHOLDERS' FUNDS 

DEPOSITS 

LOANS 

TOTAL ASSETS 

PROFIT AFTER TAXATION 




«7 


MOMOMtSY jAMOMnr 'l, 

BRITAIN 


Ulster : a tough way of 
collecting the rent 


The Ulster govemnjent’s resort to the 
province-wide rent and rate strike — a 
temporary piece of legislation called 
the Payments for Debt (Eimergency 
Provisions) Act — aroused surprisingly 
little attention when it was rushed on 
to the statute book last Octobei. The 
debate in Stonnont was perfunctory 
and within a week it was through 
without amendment. But now criticism 
is mounting. 

The strike which provoked the new 
law had gatliered momentum as part 
of the civil disobedience campaign in 
August after the introduction of 
internment for IRA suspects. About 
21,000 Roman Catholic households are 
still on strike, which means that about 
15 per cent of Ulster’s total public 
hous^ing stock is affected. The strikers 
are mainly concentrated in working- 
class estates in Belfast, Londonderry, 
Newry and Strabane. 

The act’s objective is simply to 
recover the rent due to the housing 
authority~a debt now running at 
about £60,000 a week — ^and the 
accumulated arrears, which stand at 
well over £500,000. It does it by a 
weekly deduction from any state 
benefits due to the strikers- and 
all 16 categories of benefit are being 
used to recover what is owed. The 
maximum deduction is set at £3.50 a 
week for anyone who receives an 
earnings related supplement, and at 
£1.50 a week for anyone who does 
not. So far 8,000 households are having 
weekly transfer payments, asscsssed by 
the government and not the courts, 
made on their behalf. 

The Ulster government claims, with 
nomt cause, tl^t it had no choice but 
to resort to this emergency measure, 
unless It was prepared to see a drastic 
reduotion in the house building pro- 
gramme, redundancies among local 
government workers in a province with 


a chronic unemployment problem, and 
a further deterioration in essential 
.services such as street cleaning. But 
there is no doubt that the act falls on 
the sick, the poor, the unemployed and 
not on those who are relatively 
affluent and at work. No court orders 
have yet been issued to any employer 
to deduct any payments for rent or 
rates from a worker’s pay packet. The 
government is anxious not to extend 
strife to the factc' / floor. But the 
benefits from which deductions can be 
made include death grants and atten- 
dance allowances for severely disabled 
people. 

Some 4,300 people in Belfast alone 
receive a grant fn>m tlic Supplemen- 
tary Renefiits Goniiniiission on grounds 
of exceptional need. The commisaion is 
accused of automatically denying tliis 
grant to strikers, and although the 
Ulster government denies that it does 
so, it can produce no supporting evi- 
dence. Critics of the act, notably .tilie 
Child Poverty Action (xroup, also 
dislike the abbreviated and restrictive 
procedure for appeals, which is 
designed to thwart civil rights associa- 
tion attempts to disrupt proceedings. 

So far, even the government 
admits that only 1,000 tenants 
have withdrawn from the strike and a 
furtlicr 1,750 have agreed voluntarily 
to have their rents deducted from their 
state benefits. But it seems clear that 
the hard core of strikers has no incen- 
tive to end its civil disobedience be- 
cause the responsibility for paying rent 
and arrears has been removed from its 
sihou'lders. It is also true itibat the act’s 
continuation will harden the opinions 
of the Gathoilic tenants about the Stor- 
mont regime, TTie govemmei^ has no 
choice, however, but to continue with 
the act, whose administraitivc com- 
plexity, not its deliberate intent, has 
caused moat of the ill-feeling. It 


cannot evict tenants 111 the strong- 
holds of the IRA, but neither can it 
accept that those who refuse to meet 
their rent obligations should be free 
from any legal actions at all. 

Television 


No credits 


An astonishing amount of newsprint has 
been devoted to the BBC’s projected 
television programme about the future 
of Northern Ireland, which it hoped 
would take the fonn of a tribunal 
under Ijord Devlin, tlie distinguished 
former judge. The most charit- 
able explanation is that newspapers 
were grateful for small mercies after 
the Christmas silly season, but it really 
is not worthy of so much fuss. 

No one can stop the BBC from put- 
ting the programme on, and no one 
should try to. Ulster’s prime minister, 
Mr Brian Faulkner, was, of course, 
entitled to write to the BBC’s director- 
general, expressing the view that it was 
an inappropriate moment for such a 
programme. But the BBC was equally 
entitled to make up its own mind about 
that. The Stormont government cer- 
tainly had the right to decide not to 
take part in the programme : most 
pol'iitioiiam only apf>ear on televiifition 
wlien ithey diink nt will lx? <to thrir 
advanitage. AH experienced current 
affairs producers and performers are 



Devlin : legal linkman ? 





i8 


mUTAIM 


tm jAHVMV i; 


famiMar with the practice of political 
party headquarters refusing to provide 
spokesmen in the hope of spiking some 
unpalatable programme. Those same 
pr^ucers ought by now to be capable 
of finding acceptable ways round the 
difficulties presented by official non- 
co-operation. 

Where the BBC went wrong with 
this particular programme in the first 
place was in planning it in the form of 
a tribunal under Lord Devlin, who, 
with Lord Caradon and Sir John 
Foster, was to examine “ witnesses ” in 
a quasi-judicial fashion. That was 
wrong primarily because it is an 
example of television pretending or 
aspiring to an authority it does not and 
never will possess. But television has 
every bit as much right as the press to 
discuss the political issues involved in 
Ulster and to reflect diverse views 
about its future, and the BBC has 
resources in plenty lor mounting what 
could be a useful, informative and res- 
ponsible programme, which any citizen 
of the United Kingdom stiould have the 
right to view. Politicians will alway.s try 
to exert pressure on broadcasting — just 
as they do on newspapers. The BBC has 
experienced 'that kind of pressure from 
the day it wa*- born. To suppose it 
could ever l>e otherwise would be poli- 
tical innocence. Only if the pressure 
succeeds in preventing television from 
doing its job is there cause for disquiet. 

But the BBC is not a happy place 
these days. It is under attack from 
within as well as from outside. This 
week a group of anonymous insiders 
circulated a demand for all BBC" staff 
to refuse to work in Ulster because of 
the alleged pro-cstabli.shment censor- 
ship and discrimination of the BBC" 
bosses. Both the demand and the charge 
were dismissed by the BB(" news 
reporters. But soiiiewliere along the way 
the BBC has recruited a group of 
people who have neithei loyally nor 
judgment, and who resent those wlio 
exercise either. 

Rivers 

Where there's 
muck 

The Government has anrhitious and 
expensive plans to clean up Britain’s 
rivers, canals and coastline. Mr 
Peter Walker, the Secretary of State 
for the Environment, talked about 
them this week with the publica- 
tion of the first of a two-volume survey 
of river pollution m England and 
Wales. It is intended to spend up to 



The surprise is that even worms can live in some rivers 


million of public money on 
waiter and sewerage .services in En^and 
and Wales in 1977. Last month’s 
deci.sion to rationalise the present 
fraginemted organisation of water ser- 
vices sdiouid go some way to ensure 
co-ordinaftion and efficiency to make 
tlie effort woitth w'h'ile. The 10 all- 
purpose regiiona'l water authorities, 
which are planned to appear in April, 
1974, alongside the new local councils, 
are likely to prove a consider- 
able improvement on the present 
maze of 1,400 often conflicting 
bodde.'. whioli look after Briitain’s water 
sup[)lv. I'hey will deal with water ser- 
vices literally from the source to the 
tap. Their funettionis are to include the 
prevention and control of industrial 
effluent in the pollution of rivers, the 
treatment cvf water for public use, and 
tlie development of .wurces for public 
supplies and the provision of amenities 
for recreation. Local authorities might 
denounce such a refonn as an attack 
on their democraltic rights but it was 
long overdue. The value of joint 
co-operation is now being proved in 
the management of the Tyne, Tees and 
Mersey. 

None the less, Mr Walker may well 
live to regret his expressed belief that 
there will be a far greater improve- 
ment in Brkain’.s rivers, canals and 
coasitline over the next decade than 
there was between the 1958 and 1970 
river surveys. This week’s volume does 
not make for optimistic reading, even 
if it does contain the claim that there 
lias been a sigruficant reduction in the 
length of rivw polluftSon. It seems tJiat 
17,000 miles of river now warrant 
inclusion in the first of the four river 
classifications, but that does not mean 
that they are fit for drinking. And 
because what ntattens is the volume 
of water which is polluted and not how 
many miles, these starisrrics under- 


estimate the problem After all, the 
wor^t pollution is of major river 
estuaries, not of the many small tribu- 
taries whose freedom from polluitdon 
contributes disproportionately to the 
survey’s calculations. 

An estliinated 1,248 miles of river 
are awarded classification four, which 
means that no fish can live in them — 
only worm.s. Most of these are in south- 
east Lancashire, Yorkshire, the west 
Midland,s and London. Volume two 
of the survey intends to deal with the 
causes (rf pollution and with what 
industry intends to do about it. It is 
also going to show how much capital 
expenditure is required by 1981 to 
meet the standards set by the river 
a*ithorities. Mr Walker lieKeves private 
industry will cough up about £200 
million in the next five years to clean 
up Britain’s waiter. Ortadnly, widiout 
the co-operation of industry and txnigh 
action against polluters his brave 
words will mean little. 

New laws 

Speedier justice 

The Courts Act ha.s the legislative 
limelight to itself this New Year’s Day. 
January ist is a traditional vesting 
date for new laiw-s, but the only other 
newcomers this year are a couple of 
1971 acts on the administration of 
estates and die lecognition of other 
countries’ divorces, plus a few clauses 
that Iiave hung about unvested from 
previous years and even previous 
governments (on how blood tests 
may be used in paternity cases, for 
example, or how lorries may be tested 
for roadworthiness). These aie hardly 
in the same class as the administrative 
upheaval caused by a wholesale 
replacement of the syatem oC higher 


? ’1^' r 


T T ' 


tllE WOMtUST JANVAKY I, 197a >9 


At the beginning 
of 1971, three 
long-standing 
national banks 
came together : 

the Banco di Roma of Italy, the Commerzbank of 
Germany and France’s Credit Lyonnais. 

The alliance of forces of these three banks brought 
into being the first closely-knit European banking group. 

Its world-wide network of 3.000 branches in 
Europe and representafion in 55 different countries 
and 21,6 billion dollars in deposits gives the group a 
truly international stature. 

Its unique composition, a staff of experts who know 
ail there is to know about your finance and banking 
problems, enable it to offer the multinational services 
you need with increased speed and efficiency. 

This IS the sign of a unique banking experience. 

Bank on it. 



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21 


cruninal courts in Er^fland" and Wales 
and some ccmsequent reshuffles in the 
civil courts as well 

On D^ember sist^ the antique 
system of as^ courts and the 
scarcely less antique network of 
quarter sessions came to an end. In 
their place (literally, since the new 
court«building programme has not 
begun) will be the new system of 
crown courts with civil and criminal 
jurisdiction which will come fully into 
operation on January iith, when the 
new law term opens. The system will 
have three tiers : in 24 towns judges 
of both the high court and the new 
circuit bench will deal with criminal 
and civil cases ; at another ig both 
sorts of judges will sit, but will deal 
only with criminal cases ; at another 
46 circuit judges only will deal 
exclusively with criminal cases. The 
theory is that by increasing what Lord 
Beeching, on whose report this reform 
is based, called “judge power” and 
decreasing the number of places where 
judges have to sit, the appalling 
delays in criminal cases should be 
reduced and it should also be possible 
to increase the number of civil cases 
heard outside the main population 
centres. The civil law function of the 
assize system had virtually atrophied. 

About 60 towns will now cease to 
have criminal courts above the level 
of magistrates’ courts. The circuit 
bench, rightly, includes all county 
court judges as well, to improve 
flexibility. But since a number of 
county court judges will have steered 
clear of criminal cases all their lives, 
and the reverse is, true of a number 
of criminal lawyers on the circuit 
bench, this unity is more apparent than 
real. The circuit bench was not to be 
open to solicitors (contrary to the 
Beeching commission’s recommenda- 
tion), but a compromise was reached 
to heal an unseemly split that began 
to appear between the two branches 
of the legal profession as the bill went 
through : soaoitors were to be eligible 
for the new part-time recorderships, 
and after five years in this role would 
lie eligible for the circuit bench. In 
the fthl batch of recorderships, the 
ratio of applicants to appointments is 
roughly equal among both sc Heitors 
and barristers ; but the number of 
barrister-applicants was phenomenally 
Wgh. 

Delays have been most ^rious in 
the high^ criminal and civil courts. 
Temporary courts, with the new 
system in mind, have sprung up in 
such atrangic places as Wellii^n 
Bariadb St Jmuk-s Square. The 


aanaiN 

Department of the Environment — to 
which the responsibility for building 
courts has been transferred — has 
planned a building programme, not yet 
approved, rising from £5 million a 
year in 1972-73 to perhaps £7 
million a year in 1977-78, and then 
tapering off for another 15 years, to 
bring the new, crown court system up 
to scratch. New courts are planned 
first of all for London, Leeds, Liver- 
pool, Newcastle-on-Tyne, Oxford and 
Portsmouth. But the success of the 
new system does not just depend upon 
brand-new* courtrooms, but also on the 
ability of lawyers who have to some 
extent become inured to, or even 
occasionally dependent upon, long 
delays before their cases are heard, to 
adapt to speedier legal business. 

Art 

How to keep them 
over here 

The four-man review committee, which 
advises the Department of Trade on 
which works of art should or should 
not be allowed to go for export, has 
had a bad year. In February the Gov- 
ernment, while accepting the 
committee’s suggestion of a three 
months’ delay before a licence was 
issued, rightly refused to produce the 
£2 million needed to keep Velasquez’s 
portrait of Juan de Pareja in Britain. 
On top of this, if the National 
Gallery’s current appeal to save Titian’s 
painting of the “ Death of Actaeon ” 
fails to gather the necessary extra 
£231,500 — it raised just over £21,000 
in the first three weeks — that too could 
disappear to America. The committee 
has never had complete control of 
what happens and with the inflationary 
boom in works of art drawing more 
of them on to the export market, it 
forecasts in its annual report (Cnind 
4845), published on Thursday, that 
“ there is a real prospect of the control 
breaking down.” 

Since the committee was set up in 
1952 its work has more than doubled. 
That is not just because more paint- 
ings are being sold. In the past a 
potential seller was often attracted by 
the financial advantages of selling 
direct to a British museum. He is then 
exempted from both estate duty and 
capital gains tax (the Velasquez that 
sold for £2.3 million probably brought 
the Treasury around £1.5 million), 
That carrot still remains. But the 
daaaljlng prices at Christies and 
Spiheby’s look better bait, so more 


paintings end up where the big money 
is — usually in America. 

Despite the pessimists at the galleries, 
though, Britain’s balance of art does 
not look too bad. Last year we imported 
just over £55.5 million worth of works 
of art and exported £53.5 million. But 
exorijitantly priced national treasures 
cannot be bought back, and any tight- 
ening of British controls — on a line 
with Italy and France which have 
much tougher policies — would, of 
course, jeopardise Britain’s position as 
a major international art market. As 
in a previous report, the committee 
recommends that works belonging to 
public bodies and valued at over 
£25,000 should be refused export 
licences if it considers them “of national 
importance.” It also recommends 
that a non-cumulative annual 
purchase grant should be available as 
a long-stop to prevent the loss of 
pieces important to our national 
heritage such as the Caxton pianu- 
script (saved from export by a kind 
American) and the Oscott lectern (now 
lost to New York). 

Before becoming the minister 
responsible for the arts, Lord Eccles, 
to whom the report is addressed, openly 
supported the idea of fiscal incentives 
to encourage more private patronage. 
He has said little about it since he took 
office but he has made it clear that, 
where the government is concerned, 
financial priorities will be given to 
museum amenities rather than to the 
building up of collections — the national 
museums now leceive over £2 million 
a year in purchase grants. Lastly, 
the committee airs the possibility 
that we could follow America’s lead 
and give tax concessions so that donors 
of money or works of art to a museum 
can claim their value as deductions for 
tax purposes up to as much as 50 per 
cent of their income for that year. That 
proposal mu‘st come under the generic 
heading of artistic licence. 



Bed^s : efity all mnt monay 




Cmmunity development 

Raising false 
hopes? 

All industml societies are seardhing 
for convincing ways to help the urban 
poor— ^be »they migrant workers in 
Europe or ghetto West Indians in 
Canada. Tiptoeing cautiou^y after the 
Americans and their sometimes bitter 
experience of community action in the 
war on poverty, the Home Office 
announced a community development 
programme in 1969. The scheme was 
to a large degree the work of one civil 
servant, Mr Derek Morrell, the head 
of the children’s department, who died 
early in 1970. His assumptions ran like 
this : people who need the social 
services and are not getting them tend 
to live in hnpoverishecl areas ; directing 
more resources to such areas through 
traditional agencies helps — but not 
enough, and the process is endless ; 
there must be potential leaders in poor 
communities who could be helped to 
do more for their locality than a bunch 
of bureaucrats. So the government 
decided to launch a series of 12 (the 
last three areas were designated in 
December) experimental community 
development projects (CDPs), each 
having an action team of three to 
energise the local population and a 
university-based resear^ team, again 
following die ’American pattern, to 
evaluate what happened. Investment 
in the four projects that are already 
in operation (Southwark, Liverpool, 
Coventry and Glamorgan) is running 
at £165,000 a year for the local action 
teams and £95,000 a year for research. 
By 1974 costs will be up near the 
maximum of £800,000. 

The Southwark CDP, which began 
in August, 1970, has run into every 
conceivable difficulty. Here the model 
of a free-floating team stimulating 
demands on the local authority, whose 
support it needs to survive, has been 
tested to near breaking point. The 
borough was still sii^fFering, when the 
project started, from the convulsions 
following the 1963 reorganisation of 
London government. The chairman of 
the welfare cornmiuee (who lived in 
Newington ward, the project area) and 
the chief welfare and children’s officers 
were all keen on the Home Office 
experiment but moved on or out before 
the project got going. And Southwark 
council, recently bitten by squatters, 
was worried at the prospect of yet more 
pressure. 

The original bumpf designed to woo 



Southwark : action is certainly needed 


local authorities concentrated on the 
interest of CDPs in the social services. 
To local councillors this means health, 
welfare, children, and the other 
activities now integrated in the new 
social service departments. What the 
phrase does not include are the more 
politically sensitive subjects of housing 
and redevelopment. But to social 
administration experts at the centre, 
planning, housing and education are all 
social services. So right from the start, 
as the project leader identified hou.sing 
and redevelopment as the problems of 
crucial interest to Newington’s 5,000 
adult population, Southwark council- 
lors felt they had been sold a pup. 
Money was the next problem. The 
Home Office recommended that CDPs 
be given £20,000 a year till their third 
year, then £40,000. Southwark refused 
to allow such a sum to be controlled 
by the CDP committee even though it 
was itself represented on the commit- 
tee. As this bounty would have involved 
only £5,000 of ratepayers’ money this 
seems a bit niggly. (The other 75 per 
cent would have come in the form of 
a matching grant from the Exchequer 
through the urban programme.) So 
each CDP activity had to be separately- 
sanctioned by council committees. 

Against this background, what has 
the project been able to do ? Play- 
groups are dear to the hearts of com- 
munity workers and Newington ward 
can boast an increase in its provision ; 
one local group has got together to 
persuade the Greater London Council 
to lease some land for play-space which 
had been intended for a comprehemive 
school ; an empty house has been taken 
over as a base for play activities for 
children in the holidays ; a self-help 
advice scheme about social security 
ben^ts has been mooted, and so on. 


But the biggest push by the project 
was a joint effort with the local plan- 
ning department. Under the 1969 
Housing Act the local <iuthority is 
obliged to consult residents about dis- 
trict plans, and Newington needed a 
lot of sorting out. In July an exhibition 
was mounted by the planning depart- 
ment in the CDP office. About 1,000 
people came to see whether their 
houses were definitely scheduled to be 
pulled down soon, sometime, or 
whether they lived in a patch where 
rehabilitation was a possible alterna- 
tive. The project team wanted to 
follow up with meetings where groups 
of residents, of which there are now 
16, would he able to prepare questions 
to put to councillors. But only two 
meetings have taken place ; .some 
councillors feel that the CDP creates 
distrust for the local authority's way 
of working. 

But things are getting better for the 
project. Two weeks ago the Southwark 
finance and general purposes commit- 
tee finally decided to give the CDP 
committee control over a budget. 
Tentative discussions are going on 
about renewing the series of residents* 
meetings. Aid a growing body of 
councillors, including some younger 
recruits, are now in favour of the CDP 
approach. 

But nationally a big problem remains 
for CDPs. The whole enterprise is said 
to be “ action-research.*’ But the action 
teams do not like being evaluated. 
They do not want the researchers 
knocking on doors asking questiom — 
like “ How much does your husband 
earn ? ” — ^which mav frighten people 
off the project. And the work of the 
1 2 CDPs is going to be so diverse that 
cx>mparisons of their effectivenessfi^ay 
bc.irapossiWr. 









^ . v-'- 


















j;. •■ ■ ■' 




«c^ 

■4.v-:::X .. 












W/iaf are the merits of the 128 m 

How many mcrfts has ft got^ Who /}c?* 
(/rfinod V hat they are^ Fiat or the pt/f' 
bhc^ Publicity^ The press ^ The on/^i 
way to pet around all the ddficultieh 
involved in these questions is to saw 
that the 128 has one special fault, r/?®* 
fault of beinp not mat Since everythin A 
and everybody have faults which matc% 
their qualities. Fiat has thought it betteJt 
to make the 128 without any of thm 
technical solutions being so daringly 
advanced as to be subject to inevitable 
faults Let's take the drive, for exampledt 
The fact that it is front-wheel drive ha^ 
no special merit in itself, it's just onq, 
answer to the problem. It's the careful 
design which gives it merit A right anS' 
normal merit \. 

Fnit IPS. 2 door. 3 door "station wagon' 

4 door. 1, 116 cc , 55 bhp (DIN), 140 kph - 87 mpt* 


If I A T 


Turin, ttal\ 



The Economist Diary 

Hh most mlinmatui and s( nsihli^ plan tial 
Jiatij in tli< moth! 

^ Makes business a pleasure 

h\ i()mhiningth(Mn(()ni])ai«il)le(l(‘sk top 
vioik of rek^ieiK (‘ with th(‘ most 
s(msibl\ plann(‘d apiioiiitments book 

bs placinfj at \our hntjertip^ 

■ 100 ]) s of \ iki il)l( f u ts iiul fu UH ^ 

# s|)( (1 ilh (list I Ik (1 1 loin int( I n it ion il 

u s( u( Il ->111 \< vs ind oIIk i il st itistK il 
in il\s( s c ()V( 1 111 ^ [)ul)li( ilf ins 
(omiTKUt mdusliv indlhi pioftssions 
int ludnn*^ spt i i il sc ( t ions (k v ott d to 

IM\ I'SA bh( WOHI.l) 

■ in itl IS of t Ik v^or Id 

■ 1 ) in ips oi import int ( itv 1 1 ntrc s 
(j'-i n < II c/s 

■ 1 1 1 cli n v p VH s 
and 

■ *^pi^» loi idihc^-scs not s ind otin i 
pi 1 son il niloi ni itioii 

bv ( IK losing .ill tins ])lus 

■ twoldiK sill kookmukiis tofindlliosi 
I ( fi M IK ' S' ( t ion \ ou u I mo t ind 

■ 1 s( p u i(« si\ M n c ik nd n 

inavohitiK lx aitiiuHv bound in i u h 
ud lcath( t with its lit It and \om 
\ initials ( ml)oss(*d in it td f^old 

Fascinating to read, a jo> to use 
and a treasure to keep 

1 ki I ( onomisl |)i n \ is not onlv i 
ok iidid insti iimi nt loi tin c flu n nt 
oidc lint, o^ \oui woikin 1 i\ mi i mini ol 
! \ dll ihli nfoimdion it t m In c mii \ ( ui 

pi I m iiK nt pt I son il oi ku im s*^ ii i oi d 
I Ik I i onoimst l)i u \ is not iust lor i \i u 
l)ut foi I 1 itt t in I \N hii 11 is \\ li\ it IS 
n idi so M II ind t ) look so ^ood v\h\ it i 
fin lust Ji ad dum in tin uaiU! 

1 h It dso Is V h\ It fulfils 1 IK I d foi 
min indwomcnol iff in ind m iki s i 
> \i w ^ c ai pn s( Ml I k it i^ iKv i\ s di pl\ 
ippn Cl itcd 

The Eeonomisl Pocket l)iar\ 

I Ills slim l^)( kl t l)l 11 V tit lit In I 111 1\ pi l< t U d 
lousi has 1)1 1 n (Il d to ki 1 1 ) it 

imm K Lilali cppi n inii thi ^vhok \i n 
k IhioLi^h 

" Il h i th( imi » nsihk d i\ to d i 

livoutofthi DiskDinv c out nns 1 1 hi 1 1 
\i niakiuln woi Id t imi s and piihln 
h( lidavs md ti n out slips of 1)1 ink p ipi i loi 
loti s and mi ssa^i "■ 

I iiMii loush hound m II d k ilhii rndwitli 
pc 1 1 dl\ st 1 1 ssc d I >vi 1 s finishi d with t ik 
nil t d ( or ni i »■ this di u \ is i lus ifi ihk 
vtiaVciniKt f r those whoi ni diom 

i (|uditv 

r (hdiioM md k t us add \ oui mitids oi 

nanu c mhos'^cd m i»old li d 



ObOiinabie onlv fiom Fhe laonomist 

1 )i u I n o I I 1m I 1 h\ p l dm I I) Ml I Ik I I oiiomist 1 )i u \ I )( pi ^ > st ) i 

stj ( I I (I I s \\ I ) s M I h >1 I M ^ n i\ 1 u\ 1 hi m t I In I ( n »mi t shop 

1 ill!) i h 111 t Iv 1 1 St I 1 1 UK 1 St I mi s sn I S \\ 1 

Pi m 11 hill I nl tiid ml ui f k ( post i i I )i sk 1 > 10 P k k* t 1 1 ) 

(i)ll ml > in )i mit 1 ds ( lOp) )i n mu ( iplixtri 

PI i d n (I I poi I 1 1 di IMIS 

Inil i tl \ imi 

)M( i I Mid di otiki I >1 ms and ail in ul 1 Uc s 

\ nu 1 nil ils \hloc k k tti i s) 

\ddn s 


I i lU lo^i p n mi nt ol 


Wo will bf* happv to dispatc h I lu F < ononiist 
Oiaiio^ in attractive ^ift sloovts, with voiii 
laid one losod. to aii\ where in the world 


(/Vi(s< »u//i I la fu \ahi t ! h( 1 1 ( ^ must \i u sp(if>i 1 ltd atnUross) 
1 1 I I i onon 1 st I) iMDpiitnunt J > St ImussStmt I onilon SWl \ Ul 

fkl <tl *: 1 .^1 M 1 A. -■ _ - 




















ifyouUlike 

to sell to 160 million 
consumers 



Produce close enough to them to be in tune with their demands Provide fast service from a 
central point Assemble and store in a central warehouse and quote free-house terms Slash 
inventory costs by keeping everything m a central stock If shipping over long distances by 
container would make good sense 1^ you could use the services of Europe s prime cargo 
movers on ships trucks railways airways Put Rotterdam-Europoorttoworkforyou It sthe 
world s biggest and busiest port Right in the middle of a circle just 600 miles in diameter that 
encloses Europe s largest concentration of wealth - 160 million people eager to buy 
Geographically speaking Rotterdam-Europoort is Dutch Distribution wise it s Europe 
Shouldn t you be there’ 

For the answer write the Municipal Port Management of 

n)tterdam*eu]x^oort 

Poortgebouw 27 Stip»tjes&traat Rotterdam 




t, 1974 ' " 


a? 


THE WORLD 


^7T 


International Report 


You'll see how terribly tough 
we can be 


Mr Dom Mintoff, the prime minister 
of Malta, has to decide if he will yet 
climb down tJhe one ladder Mr Heath 
has loft him, or persist in die eternal 
opportunfism that on Thursday sent 
him off yet again to appeal to the 
Libyans for assistance. He has been told 
in as blunt a language as diplomacy 
allows that the British Government has 
had enough of the arguing about a new 
defence agreement, and diat unless he 
Climbs down the Britisli garrison of 
about 3,500 troops with its 7,000 
dependants, Who together spend about 
£13 million a year, will leave the 
inland. 

Having asked too much — an annual 
rent of £18 million from Britain and 
Nato for their conrinuing use of bases 
in Malta— Mr Mintoff has opened up 
the prospect of a cash famine and 
greater unemployment in an economy 
already subjected to food rationing. 
Yet the fact tliat Britain is saying it 
cannot puH out for three months gives 
Mr Minted a last hope that Mr Heath 
does not mean it all. 

•Mr Mintoff was not content with the 
package deal offered by Britain and its 
allies in the autumn : this amounted 
to an annual payment of £9^ million, 
plus another £7 million undei bila- 
teral agreements spread over an 
unspecified period. He rejected a con- 
ciliatory offer by Britain’s Minister of 
Defence, Lord Carrington, to fly out to 
Malta before Christmas to have further 
talks without preconditions— and to 
take, presumably, yet another of those 
interminable walks on the battlements 
of Valletta. He had already accepted 
£4} million from the British at the 
end of September. In the British view 
that was to cover the six months to the 
end of March, by which tunc Lord 
Carrington had hoped that a new 
defence agreement would be signed, 
sealed and ddivered. 


Then Mr Mintoff demanded a fur- 
ther immediate payment of £4! million 
if the troops were to stay after Decem- 
ber 31st. Plainly, he saw this as a 
quarterly payment towards his 
demanded rent of £18 million. By his 
own choosing, Mr Mintoff raised the 
stakes and the British Government 
called his bluff. It warned him in effect 
to settle or to shut up, by telling its 
troops to get ready to pack their bags. 

A garrison of t'^ 5se dimensions could 
be withdrawn only over a period of, 
say, three months. A lot could happen 
in this time. On Wednesday evening, 
Mr Mintoff got his hoped-for majority 
of one in a vote of confidence in the 
Maltese parliament — that is his Labour 
party’s margin in a house of 55 mem- 
bers — ^when the British reply to his 
demands was debated. But can he hold 
on to that majority when the Maltese 
people calciiHate the effect on their liv- 
ing standatds ? 

For these losses, Malta's new trade 
agreement with Russia, which follows 
similar ones with Poland, Rumania, 
Hungary and North Korea and an 
abortive flirtation With Libya, provides 
no real compensation. At the best, these 
agreements on trade and possible 
industrial developments are hut birds 
in the bush, not cash in hand. And 
Mr Mintoff, who is fully aware of the 
basic feelings of the Maltese people, has 
made it clear that he does not want 
Russian forces to have base facilities 
on the island even if the British pull 
out. The idea of getting such facilities 
may be a glint in the eye of some 
Russian adimirals, but as yet the Soviet 
government does not seem to be pre- 
pared to oflFer a hdgh price for them. 

Britain and its Nato allies, in their 
turn, recognise that the retention of a 
base on the island, now primarily used 
by two squadrons of maritime recon- 
naissanice aircraft, has only a marginal 



Mintoff : who*s bluffing ? 


strategic significance. But Bntann docs 
want to tr to keep the Russians off the 
island, although it has now made it 
absolutely pdain that it is prepared 
to pay only a limited price to do so. 
Malta in 1972 just does not have the 
strategic value for Britain that Malta 
m 1942 had, because Nato has the use 
of the mainland to the north. That, of 
course, is why Russia — which does not 
— might like a base dn Malta. 

But the troops have not gone yet. 
They have been told to be prepared 
to leave. This is much in the diplomatic 
style used by Disraeli at the Congress 
of Berlin in 1878, when he ordered 
hiis speoiail train to get steam up in 
readiness for his departure. Lord Car- 
rington, it seems, is still prepared to fly 
out to Malta, but now only on condi- 
tion that Mr Mintoff withdraws his 
demand for £4} million and shows 
himself willing to seek a new agree- 
ment. Mr Heath’s message to Mr 
Mdntoff on Thursday read like a final 
invitation to him to start real negotia- 
tions. 

So now Britain’s train has got its 
steam up, but it has not left the station. 
Mr Mintoff will have to back down if 
it is not to leave. He has jostled and 
bustled. He is now being jostled and 
bustled back. Diplomacy, especially 
when it is over hard cash, can be a 
rough game. 



98 


tNTBKiATtOMAL KSKMIT 


T«B BOOMOHnt JAlilMftV' 1^79 


United Nations 

Europe is easier 

FROM OUR SPECIAL CORRESPONDENT 

A/ow York 

Mr Kurt Waldheim as not a man to 
make msh commitments. A quarter of 
a century in the Austrian foreign 
service has made him the most 
seasoned of diplomats and in his first 
week as secretary-general-elect of the 
United Nations he has shown the 
expected preference for the cautious 
and uncontroversUI. Yet among the 
conventional hopes of his acceptance 
speech he planted one small bombshell. 
The entry of China to the UN, he 
declared, should herald the admission 
of the other divided countries “ in the 
not too distant future." 

In Ills optimism that universality 
can be achieved even before the end 
of his five-year term, Mr Waldheim 
revealed one gap in his considerable 
experience. He spoke with the perspec- 
tive of a European wrio has never had 
to deal with the tangled ^ politics of 
Asia, and of Korea and Vietnam in 
particular. This was one reason why 
the Chinese vetoed his candidacy until 
it became evident that no one from 
Asia or Africa or Latin America 
stood a chance of winning. 

His very first ta.sk when he formally 
takes over from U Thant this 
Saturday, Mr Waldheim say.s, will be 
to try to haul the United Nations out 
of the red. He acknowledges that the 
financial ori5?is is political at heart — 
most of the UN's of $190 million 

consists of unpaid asses.unenls for 
peace-keeping operations— so he will 
tackle It jx>htirally by holding immedi- 
ate consultations with all the jx>wers 
concerned, but he also plans to reduce 
the UN's expenses by making the 
secretariat leaner and nioie efficient. 
This reorganisation, he declared, 
should extend to other UN bodies, 
including the Security Council. 

While hr is reorganising the secre- 
tariat, the secretary-general will also 
have to be filling key jol^s. Almost all 
the top 25 appointments in the 
secretariat come to an end next 
March, and Mr Waldheim will have 
the option of re-sorting the portfolios 
a.s well as redistributing them, with at 
least one going to a Chinese. One of 
the nost important pests is the under- 
secretarvship for special political affairs 
that wiii. held for nianv years by the 
late RaJph Bunche. Ilis replacement 
will not necessarily be an American ; 
but his section will be kept intact. 



He won't let every sleeping dog he 


Mr Waldheim makes no bones about 
the political limitations of both the 
United Nations and the secretary- 
general. The main purpose of his job, 
he says, will be ** to try to bring the 
powers together, especially in a 
conflict," He would like the Security 
Council to meet earlier when such 
things as the India- Pakistan war 
happen, to prevent it from being 
just ‘'a receiver of bankruptcies." 

America and Europe 

They're staying 

FROM OUR WASHINGTON CORRESPONDENT 

Before Herr Brandt’s visit to Florida 
this week, professors of history were 
arguing in letters to the New York 
Times about whether he deserved his 
Nobel peace prize (and whether 
Streseinann deserved his, 40-odd years 
ago). Mr Nixon is glad Herr Brandt 
got it, or at any rate told him so during 
theii italics. Whatever reservatiions may 
have been hinted at in the past, ithe 
seal of American approval is now 
placed on Ilorr Brandt’s Ostpolitik. 
Mr Rogers, the Secretary of State, 
added hiis own affirmation of the Ad- 
ministration’s “solid support” for 
llerr Brandt’s eaiiJt European diplo- 
inac)'. Mr Kissinger, confined to his 
l>ed, au'thorised a ^tement that he 
genuinely had influenza ithis time. 

For Herr Birandt, with hiis narrow 
majority and hiis task of getting the 


wesft Oeranan traianies wMi the Soviet 
Union and Poland through the Bunc^ 
stag in the spring, the affirmation of 
suppodt that he received in Key Bis- 
cayne wvll be more than an empty 
gesture. When the treaties are ratified 
the Berlin agreements can also be 
signed and the preparations can start 
for the talks about troop cuts and a 
conference on security in Europe. 

llie not very great diifferenccs that 
appeared to exist between Bonn and 
Washington on these two points seem 
to have been successfully ironed out 
this week. Herr Brandt was able to 
leassure President Nixon that he did 
not really favour the idea of a whole 
platoon of governments, big and little, 
sitting in judgment on the proper 
military strengths to be maintained in 
Europe by the great powers. 

What matters to the west Germans, 
in a much more substantial way, is that 
they should not have to worry about 
President Nixon making bilateral deci- 
sions about troop cuts in Larope w<hen 
he goes to Moscow in May, or even 
unilateral cuts in the American forces 
there to satisfy the numerous senators 
who support the Mansfield amend- 
ment. On both these points Herr 
Brandt got a really striking degree of 
satisfaction. “ The United States,” said 
the joint statement issued from Key 
Biscayne, “ will not negotiate its troop 
levels in Europe on a brlaiteral basis,” 
and it quoted Mr Nixon as reaffirming 
that there would be no decisions 
affecting the alliance without full con- 
sultation with the allies. 

So much for the President’s visit to 
Moscow as a source of apprehension. 
But the joint statement went further. 
Mr Nixon already on record as 
affirming that the Urnited States would 
not reduce its forces in Europe “ given 
a similar approach by our allies . . . 
unless there is reciprocal action from 
our adversaries.” The Nato allies in 
Euiope are by now acknowledged to 
have manifested their “ similar ” 
approach in a satisfactory way. But 
Wednesday’s statement from Key 
Biscayne .said that 
the President reiterated that the 
American commitments in Europe will 
remain unchanired, and that, iu parti- 
<uiar, no reductions in American troops 
stationed in Europe will he made. 

This will not rule out mutual force 
reductions, done by agreement with 
Russia, provided that the defence 
capacity of the alliance remains 
unimpaired. It was still the most 
categorical rejection of American 
trTOp cuts in Europe yet uttered. The 
Nixon doctrine, it seems, docs not 
apply to Europe. 


Ireland 

The crust of the 
volcano 

FROM OUR DUBLIN CORRESPONDENT 

The danger that the violence in 
Northern Ireland would spill over into 
the south has always been recognised 
in Dublin. So the rioting at Ballyshan- 
non in County Donegal three days 
before Christmas was not unexpected. 
The army had to be called out to deal 
with ithc disturbances, which started 
after a police search for arms that 
resulted in the arrest of three men on 
charges of possessing uncertified fire- 
arms. Crowds of up to 500 fought 
with police for several hours and 
even tried to storm the police station. 
Seven policemen and 1 7 civilians were 
injured. 

This was the first major cla^ 
between police and cMlians in the 
south stemming from IRA activities. 
What Mr Lynch, the prime minfister, 
is now waiting 'to see is whether 
Ballyshannon was an isolated incident 
or will set a pattern for rioting in other 
border areas. On Wednesday there was 
a less serious disturbance at Drogheda, 
where a man was remanded in custody 
on arms and explosives charges. How- 
ever, police reports establislied that 
most of the Ballyshannon demonstra- 
tors came from republican clubs in 
Northern Ireland and it has been 
claimed that as many as 90 per cent 
of the rioters came from outside Bally- 
shannon. For their part, the IRA arc 
saying that they managed to keep the 
crowd under control until the police 
made a baton-charge. A spokCsSman 
for the IRA Provisionals claimed that 
the organisation’s order forbidding 
clashes with the police and army in 
the republic was still in force. 

The Ballyshannon riot did nothing 
to heal the breach betvx^een the IRA 
and the church. A local priest at a 
Christmas eve mass charged the IRA 
with ** hatred, bigotry, intimidation 
and violence.” The bishop of the 
diocese condemned them as “ callous 
men who are now preparing to plunge 
the whole country into anarchy and 
strife.” And Cardinal Conway in a 
Christmas broadcast said that normal 
life in the republic rested only on a 
crust, underneath which lay a molten 
volcano of potential violence. 

The cardinal’s warning is being 
taken seriously and many obsen^ers in 
the republic beSSeve that the soudi 
could easily be engulfed in 

violence if the conflict in Ulster is 


iimMATioNAL 



The cardinal has his ear to the ground 


prolonged indefinitely. Mr Lynch has 
clearly decided to take tougher action 
against the IRA, particularly in the 
border areas, and searches for arms, 
border patrols and more vigorous 
prosecution of the law against illegal 
arms-carrying are being undertaken. 
Faced with pressures from Britain and 
from the opposition parties in the Dail, 
Mr Lynch has decided to take the 
strongest measures against the IRA 
short of internment. 'Fhis may result in 
more Ballyshannons, but the alterna- 
tive is the growing anarchy which 
unchecked IRA activities would bring 
to the republic. 

Jugoslavia 

If Czechs applaud, 
we should tremble 

Ever since he ordered the purge of the 
Communist party in Croatia last 
month, President Tito has been acting 
more like the hardline boss of one of 
the most benighted countries of the 
Soviet world than the benign ruler of 
what is still the least rigid communist 
country in the world. He has been 
stomping around the country declaring 
that he is ready to ” defend socialism ” 
against “ counter-revolutionaries ” and 
“ class enemies ” with all the means at 
his disposal. This tickled the army 
chiefs who have been urging him to be 
tougher. 

But some of Mr Tito’s senior col- 


29 

leagues appear to be having second 
thoughts about the course on which , 
they have all embarked. Mr Kardelj, 
the party's chief ideologist and for 
years President Tito’s clo.sest adviser, 
said in a .speech just before Christmas 
that no one must be allowed to turn 
the “ present process of ideological 
and political purification into a 
witch-hunt.” And at a meeting of the 
party’s executive bureau a few days 
ago there was little enthusiasm for the 
proposal to make individual bureau 
members re.sponsil)le for areas such as 
ideology, organisation and inter- 
national party links. This proposal 
smacked too much of the prc-1966 
days when the former police chief, 
Mr Rankovic, built up his personal 
fiefdoin within the party as its 
secretary in charge of personnel policy. 

Why the sudden doubts ? 'Fo begin 
with, President Tito has been finding 
it trickier than he may have expected 
to ” normalise " Croatia. The party 
leaders in Croatia — Mr Tripalo, Mrs 
Dabccvic-Kucar, Mr Pirker and Mr 
Bijelic— stepped down quietly. But 
they have been followed by a lot of 
other big fish. These resignations have 
got some people worried. The 
Belgrade weekly Ekonomska Politika 
complained on Monday that ” every- 
body who is anybody in Croatia’s 
political life may be resigning." 

The top layer of the Croatian party 
is now' occupied by relatively unknown 
apparatchiks. The same may soon be 
true of the state government, despite 
the fact that Mr Haramiia, the 
popular prime minister of Croatia, 
who resigned last week, has now been 
replaced by Mr Perisin, the governor 
of the Jugoslav national bank and a 
generally re.spectcd figure. Morale in 
Croatia is at a low ebb, notably 
among intellectuals but also among 
ordinary people. Nobody is expecting 
anything constructive from the new 
leaders, who are seen as interlopers 
imposed from outside — although this 
is only partly true, since President 
Tito’s coup last month was master- 
minded for him by such Croatian 
conservatives as Mr Bakaric. 

Will the compromise over the allo- 
cation of foreign currency among 
Jugoslavia’s republics that was 
announced this week help the new 
leaders ? Under the new arrangement 
(which has still to be worked out in 
detail) firms will be allowed to retain 
20 per cent of their foreign currency 
earnings instead of only between 7 
and !o per cent a.s at present. 
Tourist firms will be allowed to keep 
up to 45 per cent. Both these 



30 

measures will help Croatia^ which 
cams 72 per cent of Jugoslavia’s 
tourist revenue and a large part of 
its export revenue. 

But these measures fall far short of 
the economic demands that had been 
put forward by the deposed Croatian 
leaders. The general public in Croatia 
is likely to greet the compromise 
coldly. One obvious reason is that 
. so njany political heads are being 
lopped off in a purge that affects 
journalists and academics as well as 
politicians. The Croatian Communist 
party’s central committee decided on 
Christmas Day to hold an official 
inquiry to decide who was responsible 
for the plague of “nationalism and 
“ liberalism ” in the republic. Some 
elements within the party, particularly 
the powerful ex-partisan associations, 
want to drag the scapegoats before 
special courts. 

The danger now, as the witch-hunts 
get under way, is that the Jugoslav 
Communist party could regress to the 
kind of Stalinism fa'niliar to those 
who live in other parts of eastern 
Europe. It is this possibility that must 
now worry some of the more far- 
sighted leaders such as Mr Kardelj, who 
have no special sympathy for the 
deposed Croat loaders or their cause. 
A new wave of stalinisni would 
threaten their own position, and could 
also damage Jugoslavia's foreign 
relations. Jugoslavia is now 
desperate to obtain western capital and 
knowhow. The prospect of continuing 
internal trouble could easily make 
investors pause' just when the Jugo- 
slavs are ready to make further con- 
cessions lo attract them. Tliis week 
there were reports that the govern- 
' ment may be prepared to accept the 
principle of foreign majority holdings 
in joint companies — a hitherto unheard- 
of thing in a communist country. 

And when Czechs and east (rcrmans 
start clapping their hands, it may be 
time for Jugoslavs to tremble. In 
mid-Decembn, Radio Prague praised 
Mr Tito for treading on “ rotten 
liberals ” and made a detailed analogy 
between contemporary Croatia and 
Czechoslovakia in 1968. Can the new 
signs of Stalinism be turned back in 
Jugoslavia ? Any obvious political 
concessions designed to strengthen the 
liberals in Croatia and elsewhere would 
cost Mr Tito too much face and pro- 
voke the wrath of the hardliners. 
The trouble is that in communist 
regimes a straightforward confront- 
ation between hardliners and liberals 
almost invariably ends with the hard- 
liners winning. 


INTfiftl^ATlOKAL RBPOlkT 

Indochina 

Pre-emptive strike 

FROM OUR SAIGON CORReSPONOENT 

According to Mr Laird, the American 
Defence Secretary, the bombing raids 
on North Vietnam that ended on 
Thursday had the primary role of pro- 
tecting the remaining American forew 
in South Vietnam. But in Saigon this 
catch-all explanation for American 
actions is not completely accepted. Mr 
Laird was probably much closer to the 
real reason when he spoke of the 
possibility of increased North Viet- 
namese military' pressure between now 
and President Nixon’s visit to Peking. 

Not that the communists are now 
believed to be capable of anything 
approaching their nationwide Tet 
offensive in 1968. The combined 
effects of the Vietnamisation pro- 
gramme, American and South Viet- 
namese air power, and the South 
Vietnamese incursions into Cambodia 
would seem to rule this out, at least 
in the short tenn. But since the start 
of the current dry season intelligence 
reports suggest that there has been a 
significant North Vietnamese concen- 
tration of troops In the so-called 
“ tri-border ” region where the frontiers 
of Laos, South Vietnam and Cam- 
bodia meet. 

From this border area, the most 
desolate and remote in Indochina, the 
communists could attempt to overrun 
the important central highlands towns 
of Kontum and Pleiku in South 
Vietnam’s second military region. If 
any major North Vietnamese drive is 
to be launched against the south before 
Mr N'ixon’.s Peking visit, this region 


TUB ECk^MifST jA^lUAltV 
* 

seems the most likely target. 

Farther south, government forces in 
the Mekong delta and around Saigon 
are considered capable of handling any 
foreseeable assault, and military 
planners do not expect a major 
communist offensive in the far north 
despite reports that the communists 
are building an infiltration route 
through the demilitarised zone. The 
general assessment is that the North 
Vietnamese will wait another year for 
their next all-out attack in the south. 
But this does not exclude the possibility 
of smaller local offensives aimed at 
throwing the South ^Vietnamese off 
balance and threatening Mr Nixon’s 
Peking visit and his electoral position at 
home. American commanders are also 
concerned about the recent North Viet- 
namese gains in Laos and Cambodia. 

In the attempt to check the volume 
of North Vietnamese reinforcements 
and supplies flowing down the Ho Chi 
Minh trail into the wai zones, the 
Americans have subjected the trail to 
intensive aerial boml>ardment in recent 
months. Using improved bombing 
techniques, the campaign ha.s had an 
appreciable effect and, according to 
some estimates, less than 20 per cent 
of communist supplies have slipped 
through the aerial gauntlet. But 
American military' planners have long 
maintained that the most effective way 
to cut the pipeline is to hit the depots 
and communications routes in North 
Vietnam itself — as well as the air bases 
from which North Vietnam's Mig 
fighters operate after their arrival from 
Russia or China. 

These seem to have been precisely 
the targets struck, during the past few 



Nixon gets his blow in first 


TKB BdOMOMtet JAMVAAY I» 1979 


V 




The Brussels 
International Trade Fair 

presents all the exhibitions to be held m 1972 


25th February -5th March* 13th Internationpi 
BUILDING TRADE and DECORATION Show 


27th February -6th March* 17th Trade Show 
EUROPAC 


19th -26th March* 10th Toys and Games Trade 
Show BEL-JOUETS 


16th -2l8t April* 2nd HOUSEHOLD COMFORT 
Trade Show 


29th April -14th May * 45th Brussels TRADE FAIR 


24th -28th May 7th European Heating, Air- 
conditioning and Insulation Exhibition - EURO- 
CLIMA 72 


27th May -4th June 2nd International INDUS- 
TRIAL EQUIPMENT Exhibition 

3rd -11th September * 18th Trade Show 
EUROPAC 


9th -13th November * 8th International BABY- 
SHOW 

23rd -27th November* 35th International FURNI- 
TURE Show - Brussels 1972 


9th - 17th December 6th International WOOD- 
WORKING Show 


* th999 9xhibiti9ns era h9ld 9V9ry ye«r 




Brussels European Commercial Centre 
120.000 sq yds covered 
^,000 sq yds for exhibitions 


Palais du Centenaire 


INFORMATION BRUSSELS INTERNATIONAL TRADE/Am PAWIS DU 
CENTENAIRE, B • lOW BRUSSELS - TEL 02/78 <8 60 - TELEX 28 643 


"North Humberskio » a region of major 

growth potential For any industrialist there 

is no bettor area to invest in than Hull. I hope 
that you know you can now invest in the City 
of the Future " 

Graham Page. M.P , 

Mlmstar of Development, May. 1971. 



TAKE A CLOSER 
LOOK AT HUU 

A second London seminar on Develop- 
ment Opportunities in Kingston upon 
Hull is to be held at the Connaught 
Rooms in March. Further infoimation 
from 

Ian R. Holden, Director of Industrial Development, 
City and County of Kingston upon Hull, 

Guildhall, Kingston upon Hull. Tel. 0402 36880. 


3 ^ 

days, in the most sustained aerial 
offensive against die north since Presi- 
dent Johnson ordered the bombing 
halt in 1968. On Thursday, military 
spokesmeji in Saigon announced that 
the targets had been missile sites, anti- 
aircraft batteries, airfields used by 
North Vietnam’s Mig fighters, and 
some fuel and supply dumps. The 
North Vietnamese have been saying 
‘something different. They allege that 
civilian targets, including a hospital, 
have been hit. I’he fact that bombing 
is never entirely accurate makes it 
possible that this is true. 

India and Pakistan 

After the debacle 

President Bhutto of Pakistan is playing 
his cards close to his chest in his 
dealings with the presiclent-in-exilc of 
Bangladesh, Sheikh Mujihur Rahman. 
Since Sheikh Mujib was released from 
prison on December ^'^rd and placed 
under house arrest m Rawalpindi, the 
two men are said to have met only 
twice. What they actually said to each 
other no one seems to know. 

Sheikh Mujib must be arguing that 
it would be quite impossible for him 
to come to any agreement with the 
Pakistani govermuent until he has gone 
back to Dacca and sounded out his own 
people. Whatever President Bhutto says 
about the “ indivisibility ’* of Pakistan, 
Sheikh Mujib knows that the other 
Bangladesh leaders have moved far 
beyond any idea of regional autonomy 
within a united Pakistaji. 

Mr Bhutto knows this too. But the 
fact that Sheikh Mujib is still in his 
hands is a card that can be played in 
various ways. Eventually there will have 
to be negotiations between the Indian 
and Pakistani governments. But the 
Indians Itave already recognised 
Bangladesh as an independent state 
and, in their view*, that is something 
that cannot f)p undone. Both India 
and Pakistari have got hold of slivers 
of each other’s territory' in the west 
of the subcontinent ; and both armies 
are holding prisoners of war. 1'he fate 
of the former governor of East Pakistan, 
Mr A. M. Malik, eight of his ministers 
and 2 1 senior civil serv'ants who are 
being held in cuslodv by the Indian 
army in Dacca also has to be settled* 
The Bangladesh government has asked 
the Indians to hand them over to face 
trial. 7 ’he Indian foreign ministry is 
stalling. 

In the meantime, the Bangladesh 
leaders are having trouble bringing the 
Mukti Bahini guerrillas under cx)ntrol. 


inteanational report 

The thirst for a vendetta is still running 
strong and daily there are reports of 
small numbers of Bihari Moslems— 
from whom the West Pakistanis 
recruited their irregular militia — 'being 
slaughtered. Between 250,000 and 
500,000 Biharis are now concentrated 
in two Dacca suburbs. The Mukti 
Bahini are trying to stop food from 
reaching them and were it not for 
Indian army patrols their fate might 
be worse than hunger. 

I'or her part, Mrs Gandhi thinks 
that thcr(‘ i.s no point in talking to the 
Pakistanis until their country recovers 
from it.s po.stwar convulsions. She is 
trying to keep the lid on Indian 
jingoism and is playing down brea<‘hes 
of the cea.sefire agreement — although 
after five Indian soldiers had been 
killed and 29 wounded by a Pakistani 
artillery barrage in the Ganganagar 
sector on Monday night the Indian 
defence rnini^stcr warned President 
Bhutto that he would share the same 
fate as General Yahya Khan if he 
persisted in undermining “ the integrity 
and self-re.spect " of India. 

On tlie home front, Mrs Gandhi is 
try ing to get people thinking about how 
to out the Bangladesh economy. 
The Bangladesh government estimates 
that It will take mon‘ than £1,000 
million to put that economy right. The 
Indians think it needs only £350 
million. Whatever the figure, Mrs 
CJandhi's proini.se of all-out support will 
mean cutting back on development in 
India. But Mrs (landhi knows that this 
will not afTcct her pio.spects in the 
elections due to be held in ten states 
in March. 71 iis is still a time when 
emotion runs high. 

Australia 

Alliance devalued 

FROM OUR CANBERRA CORRESPONDENT 

Just before Christmas the Australian 
prime minister, Mr McMahon, 
announced that the Australian dollar 
would be revalued 6.32 per cent al)Ove 
its previous parity with the American 
dollar. T^is meant a 2.25 per cent 
devaluation against sterling. The 
announcement followed three days of 
wrangling in cabinet between the 
Liberal party, the .senior partner in the 
coalition, and th-e Country party, which 
gets less than 10 per cent of the total 
vote but without which the Liberal 
party would ht unable to govern. 
During those three days the Country 
party leader, Mr Anthony, had threat- 
ened to take his party out of the coali- 
tion if the Liberals insisted on following 



Anthony shows a bit of muscle 


the trea.suiy’s advice tf) retain parity 
with sterling and revalue at 8.57 per 
cent above the previous rate with the 
American dollar. 

The result was a compromise, widely 
regarded as an unwilling concession by 
the Liberals and a modest victory for 
the Country party, which had wanted 
a bigger devaluation against sterling. 
In the proce.ss, relations between the 
two parties were made worse than they 
have been for many years. 

The situation was sufficiently complex 
to allow both parties to put forward 
res[>ectable arguments. The Liberals 
could point to the increasing diversity 
of Australia’s trade (especially with 
Japan), to the American pressure for 
revaluation of prosperous countries' 
currencies against the American dollar, 
and to the difficulty of persuading the 
International Monetary Fund that 
Australia was in substantial disequi- 
librium and so had a case for devalua- 
tion. The Country party could point to 
the sagging incomes of fannens, most 
of whose export markets lie in the 
sterling, not the dollar, area. (Meat is 
an exception.) Most expert opinion was 
with the Liberals ; but then most 
economic experts live in cities. 

Sudi an argument between the 
two parties i.s not new, but it has rarely 
been so tough. The last occasion was 
in 1967, when Mr Anthony’s prede- 
ces.sor, Sir John McEwen, unsuccess- 
fully demanded devaluation. The 
Country party has long leaned towards 
devaluation I)ecausc it would increase 
the amount of money the firmer gets 
in Australia for his exports. When the 
economy was simpler the case carried 
more weight than it does now. That is 
why Mr Anthony had to show 
pdjtical muscle in order to bring il^r 
McMahon into line. 

Apart from the question of how 


f 4^ EOCINblIttS’f' JANUAHY ' 

effective the decision wiH be econom- 
ically, the two parties now have to 
think of the political outcome. Although 
they normally work well enough 
together in ^e federal parliament, 
relations out at the grass roots are often 
much worse. It was symptomatic that 
Mr McMahon had to interrupt the 
cabinet discussions in Canberra to visit 
a fanning area in Victoria in a pre- 
arranged attempt to persuade the local 
Liberals that they should not oppose 
the Country party’s sitting member at 
the next election. Now that relations in 
the cabinet have been soured by the 
nlarathon dispute, it will be hard to 
stop Liberal party branches from trying 
to capture Country party seats in those 
fringe areas which are not obviously 
either city or country. There might 
even be situations in which the - two 
parties refused to exchange preferences 
and thereby enabled the Labor party to 
slip in. The leaders will fear this more 
than anything. 

The Country party could have left 
the coalition, as it threatened to do, 
and might even have gone so far as 
to precipitate an election ; but it could 
not afford to give even passive support 
to the Labor party. If it did it would 
damage its vote in the small country 
towns, which is the greater part of 
its electoral strength. So it will have 
to go on working with the Liberals. 
But there will be more mutual bitter- 
ness, and a renewed Liberal convic- 
tion that if only the Country party 
could be bombed out of its stronghold 
the world would be a better place. 

Israel 

Outrage on the 
campus 

FROM OUR ISRAEL CORRESPONDENT 

The Israelis have a new problem. 
Those w*ho are mothers and fathers of 
young people are wondering what 
happened to stop the student revolution 
readhing Israel. Some of them actually 
wonder whether they should worry 
about the failure of rheir student off- 
spring to behave like their contempo- 
raries in the west. The average Israeli 
student is quiet, law abiding, ambitious 
and family-minded ; he shares his 
classroom with a growing number of 
overseas students but remains immune 
to all thought of rebellion. 

The mam reason for this wholesome 
scene is aimplc enough. With tlirec 
years of military service behind them, 
Israeli students feel they have no time 
to waste. They concern themselves with 


INtaRHATtriNAL KBPORT 



The Israelis have got a generation gap too 


two things : graduating and building 
a family. Israelis are 22 or 23 when 
they go to university, and the average 
age of marriage of all Israelis dropped 
last year to 24. 

It (is easy enough to spot the 
foreigners on Israel’s eight campuses 
by their languages — English, Spanish, 
French and Russian. At the Hebrew 
University in Jerusalem, for instance, 
the first two years of study can now 
be taken in English or Spanish. In 
1971 the student body of 40,000 
included 6,500 overseas students, or 16 
per cent, the largest concentration of 
them at the Hebrew University. The 
proportion is expected to rise over the 
next two years to a fifth. 

Tlic Israelis do not get on with their 
fellow-students from abroad — and par- 
ticularly not with die north Americans, 
who form the bulk of the foreign con- 
tingent. If the Americans are restless, 
they dismiss them as useless trouble- 
makers. They resent the higher 
standards of living and the different 
culture imported by the American.s. 
The Israelis usually have to work 
their way through university ; the 
Americans, supported from home, may 
run a car and take away their girls. 
Some of the foreign students use drugs, 
which were practically unknown in 
Israel until .the outsiders brought them. 

Although the Israelis are made to 
feel tame and dowdy by their western 
counterparts, they have no such prob- 
lem with the sons and daughters of 
the new Russian immigrants. The 
Russian students s^e shabby in their 
Russian clothes ; they are also avid 
scholars and unquestioning Israeli 
patriots. They form a marked contrast 
to their privileged and irreverent 


33 



brethren from the west. Small groups 
of north Americans have encouraged 
extremist movements in Israel, both to 
the left and to the right. Others have 
fonned alliances with nationalist Arab 
students, causing friction in the 
Hebrew University dormitories on 
Mount Scopus. They slow down work 
in class because they lack Hebrew but 
have the upper hand with textbooks, 
most of which are English. 

Why does the Israeli government 
encourage the foreign students to 
come ? Almost all of them are Jewish 
and their invasion started after the 
1967 war. At first they were urged to 
come in the hope that they w^ould 
settle. This did not work ; the students 
saw their time in Israel as an adven- 
ture and so far only 15 per cent 
of the .students who came since 1967 
have remained. Undiscouraged, the 
government turned the experiment into 
a propaganda weapon. This worked. 
Thousands of Jewish students rejoined 
the student mainstream in their own 
countries as fervent pro-Israelis. 

Another consideration was economic. 
Without massive aid from Jews abroad, 
Israel would be broke and it was 
decided that it would be expedient to 
help Jewish parents, chiefly in north 
America, who felt that a session in 
Israel w*ould be beneficial to their 
rebellious young. I'hcn there is the 
special case of the enormously wealthy 
Jewish community in Latin America, 
which will not consider immigrating to 
Israel until their children’s higher 
education needs have been provided for. 
The government’s reasoning may be 
sound but it is not calculated to soothe 
the resentment of Israeli students 
against all this foreign nonsense. 


a4 


The other war 


If the Middle East explodes again 


This Saturday President Sadat's deadline runs out and it is open season 
for the restarting of the Arab-lsraeli war Probably it will not start soon, 
and it may not start at all ; if Mr Sadat can find a reason not to fight he will 
grab it. For the Egyptians, except as rhetoric, do not talk of winning a war 
against Israel ; they talk of their ability to absorb a vastly greater degree of 
suffering than Israel can. 


Egypt’s military options. 1 he fighting 
could start, as President Nasser's “ wiar 
of attrition " started in March, 1969, 
with Egyptian artillery hoinhardnienl 
along -the length of tlie Suez canal. 
Egypt’s artillery equipment, including 
advanced Russian 2();pnrn howitzers, is 
excellent. Even so, it is quesitionahle 
how much damage this alone could 
inflict on Israel's heavily fortified |X)si- 
tions on the oanal’*^ east bank, known 
as the Bar-Lev line. 

Egypt's artillery iKinibardnienft could 
theoretiically he combined with an 
attempt to force a bridgehead across 
the canal. If the Egyptian a/ir force 
could provide air cover, this could 'take 
the form of a major invasion from 
landing craft or inoliile bridges. Egyipt 
has the equipment, including three, or 
perhaps four, armoured divisioas of 
.superior heavy and inediuni tanks. It 
also has around 100 Sukhoi-7 aircraft 
which are primarily de.signed for close 
support of ground troops. 

But there is no evidence that Egypt's 
military forces have been training for 
an ojieiation on this scale, 'I’he vital 
provision of aii cover presumes strength 



on the part of What is still believed to 
be the weakest link in Egypt’s military 
n lach i ne — cont i n ui ng fai I u re, despi te 
Russian help, to produce top-class 
ofierational pilots. It has lots of young 
men who (jan fly but few who are 
ready to be sent into combat agiainst 
Israel’s highly skilled pilots. It is 
generally reckoned thalt an air force 
should work to (the ratio of three 
operational pilots to two planes ; 
F^gypt is thought to have .sevenal planes 
for each cx)nibat-*tnaiined pilot. 

A more credible itactic by Egypt 
would be hit-and-run commando 
raids by Egypt’s elite “special forces.” 
7 ’hese could be across the canal, 
oitilier from small boaits or frorti heli- 
copiers landing behind Israers first 
line of defence, or from lK>th together. 
But Flgypt's tacticians may be veering 
away from the canal. It is argued that 
the cormnandos should not risk their 
lives by attempting to cross what is 
accepted by everyone, from Mr Mo.she 
Dayan on, to l)e Israel’s most secure 
frontier, but should attack Israel or 
Israeli positions at places where they 
might be able to inflict greater damage 
at slightly less risk. 

One possibility is that the 
commandos should attack from the sea, 
using F^gypl’s fleet of fast Komar class 
fiatrol boats. They could attack fromri 
the Mediterranean either against 
Israeli ix)sitions in northern Sinai or 
^ainj^t coastal towns or ciities in Israel 
itself, .\kernatively, they migtht be 
able ito attack Sharm cl Sheikh, on the 
southern tip of Sinai, from the Red 
Sea. The argument for .seaborne 
commando attacks, however limited, 
againj^t civilian targets in Israel is based 
on the belief that Ifsrael has a lower 
rate of tolerance for civilian casualties 
than other countries have proved to 
have. The restraining factor is the cer- 
tainty of Israeli reprisal. 

Israel’s military options. Among 
Cfcneral Bar-Lcv’is last words as chief 
of staff before he retired this 


TKE ECONOMIST jaWasV f, ' tgyir 


week was his warning that an 
Egyptian attack on Israeli civilian 
targeits would lead to massive retalia- 
tion of the same nature. TTiis is 
predictable. But reports from Israel 
indicate that any resumption of fight- 
ing l>y Ej^pt of any kind would lead 
to immediate and massive retaliation, 
though not necessarily againat civilian 
targets and noit necessarily against 
Egypt. This thinking reflects IsmeEs 
traditional faiith in the effectiveness of 
hitting back hard. 

Israel won a lightning war against 
Egyipt in 1967 because it destroyed the 
Egyptian air force on the ground. This 
was a great coup but not a repeatable 
one. Egyptian and Syrian aircraft, like 
Israel’s, are now dispersed and pro- 
tected. Holes lin the desert mark the 
Araib armoury. Egypt’s cities, industrial 
centres, military strongpoints and the 
wei^t Ijank of ithc canal itself are pro- 
tected by the complex of Russian- 
ins^talled Sam-2 and Sam-3 mi'ssile 
sy.stem$. There are reports in Egypt 
thalt even more advanced missile 
systems are being deployed. But <thc!sc 
may not be under Egyptian control : 
Russia, like other major powers before 
it, is believed 'to be using the deserts 
of the Middle East as a testing ground 
for new equipmertt. 

A punitive attack by Israel on 
Egypt is ringed with question marks. 
Russia’s reaction, for one. Both 
Egyptians and Israelis contend .that the 
Russians will keep put of the war if 
they can, but if the battle Iviits 'the 
heart of Egypt they could decide 
to come in. The , Russians have two 
or possibly three military airfields 
in Egypt : one just west of Cairo, one 
in southern Egypt and one, uncon- 
firmed, at Mersa Matruh, in the 
weif^tern desert between Alexandria and 
the Libyan frontier. They are estimated 
to have stationed in Egypt fewer than 
half a dozen Mig-23s, a unit of 
TU-i6s, including a reinforcement of 
the most advanc^ type, and several 
protective squadrons of Mig-2rs. The 
TU-i6s are equipped with stand-off 
missiles for use against ships — probably 
the American Sixth Fleet. 

Anoither que^ionable assunriiption is 
the abality of Israeli ground forces to 
knock ouit Egyptian ground forces. The 
Egyptian army is known to be large 
and to be well eqmpped ; the unknown 
clernenft is whether the linjeotsion of 
better educatted and better 'trained 
young officers has given it Ae stamina 
H lacked before. There have aho been 
questions asked recently about the 
decHmng xnoraile erf aecddns of «thc 
Israeli a<rmy. Both ohanges me relative 



THE OTHER WAR 


35 





The line thal; Bar -Lev built 



Guns dominate infantry. Bombers can 
silence guns. Sam missiles can shoot 
down the bombers unless planes with 
Shrike missiles can silence the Sams. 
So can the Egyptians stop the Israelis 
from getting at the Sams that protect 
the guna that batter the line that Bar-Lev 
built 7 


and neither should be overrated ; on 
the other hand, it is not at all obvious 
that Israeli, despite alts conrtinuiing air 
supeiliorky, would still be able to carry 
out a swift victorious invasion. 

The outcome of a duel bdtween 
Israers air force and Egypt’s ground- 
to-aiir missiles dq>ends on formidable 
eledtronic oalculaitions. I'he missiles 
shot down seveial of Ismers prized 
Phantom fighiter-bombere (it is 
estimated to have about 75) in the 
days immediately before Israel agreed 
to the 1970 ceasefire. Since then, the 
Phanftoms have been equipped with 
American Shrike missiles which home 
on the radar used by the Sam sites 
■to diireot their missiles. The Israelis can 
jani the Sams’ radar but this disables 
their own Shrikes, There are various 
ways around the problem ; for instance, 
double or treble waves of Phantoms 
that might fox the Egyptians into 
switching off, and then switching on, 
their radar at the wrong moment. The 
Israelis are unquestionably working on 
this problem ; if they are to defend 
their occupation of Sinai, they cannot 
afford the erosion of their air force. 

But if the Israeli air force outsmarts 
the Egyptian missile system, the way 
could be open for an Israeli ground 
and air invasion across ithe canal. The 
crossing or crossings would probably 
be between Suez and Ismailiya ; the 
probable target would be a stronghold 
south of Cairo. The effect, it is argued, 
would be the fall of the Egyptian 
regime and the emergence of a new 
one ready at last to sue for peace on 
Israel’s terms. 

The Egyptians themselves expect 
Israeli retaliation to take a less direct, 
and less hazardous, form. They calcu- 
late that Israel may well try to con- 
serve its adr power and attempt, 
instead, some spectacular helicopter- 
borne punitive coup on the lines of 
its raid on Beirut airjwt or its 
seizure of Egyptitan radar installations. 
If Israel does decide on a joimt land 
and air punitive invasion, the first 
tar^, »the Egyptians argue, will be 
Syria, not Egypt. When other Arab 
countries offer Egypt manpower for 
the coming battle, the Egyptians, who 
want Arab money, not Arab soldiers, 
tell them to send .tlieir volunteers to 
Syria. Although there has been evidence 
in recent weeks that ithe Russians have 
been speeding up their supplies of 
military equipment to Syria, the 
country is still substantially less vi^ell 
defended than Egypt. There is no 
evidence as yet that it has Sam-3s. 

Damascus is a vulnerable cky, 30 


miles from the present ceasefire line. 
Its ocajpation by Israel would bring 
no strategic advantages and would in 
many ways be an embarrassment ; at 
the same time, it would undoubt^ly 
cause the psychological shock ithat 
Israeli leaders believe must be inflicted 
on ithe Arab world. Other targets in 
Syria, more obvious from a military 
standpoint, are the airfields in ithe 
desert north-east of Damascus which 
are, or could be, used by Egyptian as 
well as Syrian aircraft for raids into 
Israel. Egyptians, caustic about Syria’s 
militaiy contribution, deny that they 
are using Syrian territory for anything 
except training. But other unconfirmed 
reports say that there are two 
squadrons of Egyptian aircraft 
stationed in the Syrian desert. 

Depth for depth. President Sadat has 
given warning that if Israel bombs 
^gyp^i^in ciities or industrial centres, 
Egypt will do the same to Israel. In 
theory, this could be just possible. 
Although Egypt did not get the long- 
range offensive equipment it tried to 
get from Russia, ’ts Mig-2is and 
Sukhoi- 7s have the range to reach 
Israel, either starting from Syria and 
returning to Egypt, or coming in from 
the Mediterranean. There are two 
major obstacles. First, they would have 
to find a way through Israel’s sophisiti- 
cated air defence system ; second, both 
aircraft are essentially fighters and 
carry a very light bomb load compared 
with Israel’s Phantoms. The advanced 
version of the TU-16 is equipped with 
stand-off missiles, which, it is argued, 
could be fired from a distance at Tel 
Aviv or Haifa while .the plane is 
reasonably safe out at sea. But it is 
not, as yet, confirmed that the 
Russians have handed over these 
particular aircraft to the Egyptians, 
Both the TU-16 and its missiles are 
subsonic and military experts do not 
consider this plane to be accurate when 
used against land targets. 

The Egyptians acknowledge thait in 
tit-for-tat bombing they would come 
off very much the worse. They argue 
that they can stand the suffering but 
that if, in return, they can manage .to 
drop even one or two bombs on Israeli 
towns the effect would be dispropor-r 
tionate. It is the same atigument as 
they used shorn commando raids from 
patrol touts. And the same approaA 
is applied, though more credibly, to 
air losses : Egypt, they say, can aff^otrd 
them ; Israel cannot. In rough 
estimates, the Egyptians hope to score 
one success against ith^ree of Israel’s. 
This they believe would be enou^. 
They may be right, but can they do it ? 





36 


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37 




THE WORLD 


American Survey 



Macy the boss Vanocur, MacNeit — overpaid ? Child the nation's cook 


Hard times for public 
television 

FROM OUR SPECIAL CORRESPONDENT 


In tfiis age of the real and imagined 
power of television, the life of a pub- 
licly financed, politically independent 
television service is bound to be diffi- 
cult anywhere. But the Corporation 
for Public Broadcasting, the organisa- 
tion created by Congress in 1967 to 
knit the scattered educational and non- 
profit-making television stations around 
the country into some kind of national 
service, is short of money and parti- 
cularly vulnerable. Only a few months 
ago Mr J. Edgar Hoover, the head of 
the Federal Bureau of Investigation, 
succeeded in intimidating the network 
into delaying the showing of an item 
in “ The Great American Dream 
Machine” which criticised the FBI. 
More recently the Nixon Administra- 
tion itself, far from complimenting 
public television on its emergence as 
the fourth national television network, 
accused it of trying to compete with 
the three big commercial networks for 
mass audiences. The Administration’s 
spokesman declared that public tele- 
vision must become more local and 
less centralised in outlook or risk 
losing the federal funds which are 
essential to its existence. 

Everyone agrees that American pub- 
lic television must never be compared 
to the British Broadcasting Coi^ra- 
tiion. Mr Nikboias Johnson, a member 


of the Federal Communications Com- 
mission, says : 

Its achievements must not be measured 
against the BBC but against 50 years of 
commercialism in American broadcast- 
ing. The impressive thing is that 
American public broadcasting exists at 
all. 

What exists is a frail network of 213 
stations over which programmes from 
national sources are transmitted for 
several hours a day on weekdays. The 
service is just beginning to move into 
weekend transmission. Its best known 
programme is “ Sesame Street,” for 
pre-school children. About 75 per cent 
of the American viewing public is 
within range of a public television sta- 
tion but this figure is misleading ; 
many of the stations, even in such 
important cities as Washington, DC, 
broadcast on a weak ultra-high- 
frequency signal and are difficult to 
receive clearly. The individual stations 
also rely on local and regional pro- 
grammes to fill out their schedules and 
are under no obligation to take the 
national output — >unles$ they are too 
poor to afford a local substitute. 

Congress has triaditionally had a 
pathological fear of setting up a 
government-controlled broadcasting 
system (patJiolo!gical because American 
broadcasting has suffered from the 
opposite extreme, a conspicuous lack 


of government regulation). This fear 
was respected by the Commission on 
Educational Television, financed by 
the Carnegie Corporation and blessed 
by President Johnson, which drew up 
the blueprint for American public 
television in 1967. 1'he Carnegie recom- 
mendation was that the new system 
must rest on a ” bedrock of localism ” 
even though it was to have a central 
funding organisation. That organisa- 
tion- — !the CPB — ^wa's duly created and 
its problem since then has been 
to grow in strength and influ- 
ence without acquiring that cen- 
tralisation which the founding fathers 
feared. For that reason, ithe CPB 
does not handle the transmission of 
signals itself but has delegated that to 
a separate organisation, the Public 
Broadcasting Service created in 1969. 

Since 1967, the CPB has been wait- 
ing for Congress to follow the Carnegie 
commission's advice and to design a 
financial arrangement which would 
ensure a steady income for public 
television without subjecting it to an 
annual buffeting in Congress. President 
Johnson, ardent enthusiast for educa- 
tional television though he was, did not 
suggest what that method of financing 
might be. Congress itself had rejected 
the commission’s own advice, that a 
permanent fund be created from a 
tax on the sale of new television sets. 
Also unacceptable then, as now, was 
any form of licence fee from all tele- 
vision users ; that was considered both 
too unpopulai and too hard to collect. 

Without a permanent base of sup*^ 
port, therefore, the CPB has had to 
make do with annual appropriations 
and to suffer from the fact that each 





38 

bit of scandal or controversy involving 
public television has tempted Congress- 
men to stint it of funds. 

Although CPB’s appropriations rose 
from $5 million in 1968 to $35 million 
in the current financial year (of which 
$5 million depends on a similar amount 
being raised privately), the corpora- 
tion’s annual income has never reached 
the $100 million a year whidh the Car- 
negie planners envisioned that it 
would be needing by now. But at the 
CPB, the one passionate hope was 
that there would be at least a long- 
term appropriation, covering a num- 
ber of years stretching some way into 
the future, before the political tensions 
of 1972 built up. 

A year ago this wish seemed about to 
be granted. In his budget message, 
President Nixon promis^ to offer 
legislation for “ improved financing ’ 
for public broadcasting. But no such 
legislation ever appeared and it now 
seems clear that it will not. Negotiations 
between the CPB and Mr Nixon’s 
Office of Telecommunications Policy, 
which is directed by Dr Clay White- 
head, a young technocrat as conserva- 
tive as he is bright, broke down on a 
profound disagreement about the 
nature of the public broadcasting ser- 
vice. The Wnitehead-Administration 
view is that much of the federal money 
for public broadcasting should by-pass 
CPB and go direct to the local stations 
themselves. The CPB’s view is that the 
strength of the service, and th^ effi- 
cient use of available funds, depends 
on the kind of central planning which 
only CPB can supply. 

It was in the face of this disagree- 
ment that the CPB decided to support 
a National Public Affairs Centre 
for Television (intended to make the 
pronounrcr ble acronym, N-Pact). 
Sliould CPB have done it? The cor- 
poration’s answer is that a central 
source of news programming was essen- 
tial to proper coverage of the coming 
election campaigns and that to put 
aside its own judgment out of fear of 
offending the Nixon Administration 
would be just the kind of self-censor- 
ship which it must avoid at all costs. 
But .some of the many critics of the 
N-Pact decision felt that CPB was 
merely kowtowing to pressures from 
another financial patron which has 
been more generous over a far longer 
period of time than the government — 
the Ford Foundation. (Ford has poured 
about $175 million into American 
public television since 1953 and has 
made no secret of its wish for a 
deeper treatment of news and politics.) 
Other critics, even within tlie public 


AMtEIUGAN SURVEY 


TUB BGOMOft^^r 


television system, felt that the CPB 
should use its scarce resources on 
the kind of social commentary and 
investigative reporting that the com- 
mercial networks neglect rather than 
try to duplicate the election reporting 
that the networks do superbly. 

What really angered the Administra- 
tion was the appointment of Mr 
Sander Vanocur, formerly of the 


National Broadcasting Company, to 
the job of senior correspondent at 
N-Pact. The White House feels that 
he is one of the most disccmibly anti- 
Nixon of political commentators. What 
may have hurt public television more 
was the news that Mr Vanocur will 
be paid $85,000 a year and that his 
partner, Mr Robert MacNcil, formerly 
of the BBC, will receive $65,000. (It 


Who makes the programmes 

In the report whidh, since its publica- grammes to the public television 
lion in 1967, has become the holy writ network. Now CPB has handed the 
of public television, the Qamegie Com- distribution job to the Public Broad- 
mission recommended against a single casting Service and encouraged the 
national source of programmes for production of programmes for national 
American public television. Neither the consumption by the .stronger of the local 
commission, nor Congress when it public television stations. The Julia 
enacted the Public Broadcasting Act Child series comes from Boston’s 
of 1967, wanted an American BBC. WGBH. 'fhe satiric “ Great American 
The Carnegie recommendation was Dream Machine ” and the all-black 
that there should be no fewer than “ Black Journal ” come from New 
two national production centres to feed York, where NET has joined forces 
programmes into the network. There with the local public station, Channel 


were also to be programmes produced 


Washington Week sn Review " 


for national distribution by local public comes from WET in Washington, DC. 
television stations. Yet the mainstay of When these shows are at their best, 


the system was to be local 


public television achieves that blend of 


grammes locally prepared for local regionalism and potency that its 


consumption. 

That is more or less the pattern of 


planners hoped for. 

Ironically the most popular of public 


supply that has emerged. What the local television’s programmes so far have 

audience of a public television station been produced by strong central 

sees on its screen depends on the organisation.^ which arc not members 

character of the local station. With so of the .system. One of ihc.se is the 

many of 4 hese run by universities or Children’s Television Workshop, an 
by state educational authorities (South independent non-profit organisation in 
(Carolina’s is particularly good) and New York, which with “ Sesame 

others by local school systems, the Street ” showed the world that lele- 

programme content on much of public vision could actually be used to teach, 

television is dominated by formal The other is the BBC, whose “ Forsyte 

schedules of instruction. There arc also .Saga” and “Civilisation” have helped 

five regional networks which both pro- American public television to achieve its 

duce programmes and determine the national stature. 

selection of the national output that is Another national production centre 
to be shown within their juriisdictions. m • the new N-Pact, funded partly by 
The effort of the Corporation for the CPB and partly by the Ford 

Public Broadca.sting to encourage Founriaiion. The creation of N-Pact 
diversity in national production centres and the increasing reliance of stations 
has meant demotion of the organi- within the system on national, rather 
sation called National Educational than local, programmes have brought 

Television. NET was once the major the Nixon Administration down on 

supplier and only distributor of pro- public television’s head. 

Where the money comas from I Where the money goes 


INDIVIDUALS 


UNIVERSITIES 
e COLLEGES- 


FOUNDATIONS- 

PUBLIC 

BROADCASTING 

AGENCIES 



FEDERAL COMMUNITY 

GOVERNMENT GROUPS 


STATE 6 LOCAL 
AUTHORITIES 



UNIVERSITIES 6 
COLLEGES 


LOCAL 

—SCHOOL 

SYSTEMS 


STATE AGENCIES ETC 


Total income of all public talaviaion licanoa tioldare during fiscal vaar ending June 30, »7D: SMtSSftOOO 




BOOMOMttrr lAiOMinr i, 197a 

has also offended some women’s libera* 
tionists, who noticed that Mrs Julia 
Child, whose television series on French 
cooking has made her the only real 
national star yet produced by public 
television, receives only about $10,000 
a year.) Tbe controversy over these and 
other public broadcasting salaries will 
undoubtedly be aired at congressional 
hearings in the spring. It has served to 
lay bare the larger question— how 
polished and professional may the pub- 
lic television network dare to be ? 

Dr Whitehead delivered the Admin- 
istration’s answer in October. In a 
speech in Miami before the National 
Association of Educational Broad- 
casters, he chilled them to the bone 
by scoffing at their pride in becoming 
the fourth network and by question- 
ing whether public broadcasting, as it 
was developing, could ever achieve the 
goals of localism envisioned for it. If it 
cannot, he said, “ then permanent 
financing will always be somewhere off 
in the distant future.” 

To the public broadcasters, this 
.sounded like blackmail and they said 
so. But it may also be the truth. TTre 
antipathy to the creation of pooh of 
tax money which cannot be tapped for 
other uses is held not only by the 
Administration but by the Office of 
Management and Budget and by Con- 
gress. The real question is not whether 
Congress will create a permanent 
insulated trust fund for public televi- 
sion but whether it can bear to allo- 
cate money over anything but a short 
term to .such an institution. 

It is likely that with an election 
coming all that Congress will do for 
the CPB is to repeat the current 
appropriation of $35 million for 
another year. That will mean a reduc- 
tion in activity ; for expenses will rise 
con.siderably in 1972, largely because 
of new interconnection facilities which 
are on their way to completion at a 
cost of $1 million. More stations, more- 
over, will join the system, thus r^ucing 
the size of each share of the federal 
appropriation. 

Conceivably the Administration’s 
sudden coolness could blight national 
public television, for it is just entering 
what should be die period of its most 
rapid growth. But nothing that the 
Administration has done will save 
Congress from having to decide 
whether it wants the United States to 
have a strong public television service 
or not. If it does, Congress will have 
to vote substantial sums of money and 
allow them to be used for 'the making 
of pro^anunes wfoicih tft may not 
always find to its liking. 


AStlMOAN StniVBV 

Bombs away 

Washington, DC 

A form of words from bygone war 
communiques, “ a few of our aircraft 
are missing,” was used by the Mew 
York Times this week as the headline 
for a report from Saigon. The phrase 
at once linked the present use of 
American air power in Indochina to 
the air wars of the past and reminded 
the public that the American prisoners 
of wai are not just a problenri left over 
from the 1960s, but a tody of men still 
being swollen by new recruits. 

Neither train of thought is welcome, 
to President Nixon. On the one hand 
he has committed himself to recover 
the prisoners before American power 
is finally withdrawn from Indochina. 
On the other, he told Time magazine 
in an interview published this week : 
Vietnam will not be an issue in the 
[1972 election] campaign, as far as this 
Administration is concerned, because wc 
will have brought the American 
involvement to an end. 

Scepticism about both promises has 
been stimulated by the renewal of big 
bombing raids on North Vietnamese 
targets. The protests are being led by 
the chief Democratic candidates for 
the presidency, and little groups of 
ex-servicemen barricaded themselves in 
the Statue of Liberty and elsewhere 
to show their anger.- A number of 
the families of American prisoners-of- 
war are now convinced that their 
release is less important to the .Admini- 
stration than its determination to 
avoid outright defeat. 

For obvious reasons the prisoners 
get more public attention at Christmas 
than at other times. This year Mr Bob 
Hope, on his customary visit to 
entertain the troops, flew to Vientiane 
to plead for a visa for Hanoi ; his idea 
was that a large private charitable 
contribution might speed the release 
of the prisoners. He got nowhere. The 
North Vietnamese and Vietcong 
delegations in Paris have, however, 
released about a thousand letters from 
prisoners for delivery through a private 
peace organisation to their families. 
Some, of the writers had not been heard 
of as prisoners, or been known to be 
alive, before. 

Both the New York Times and the 
WcLshington Post dwell on the superfi- 
cial incompatibility of two of the 
Administration’s explanations for the 
past week’s round of heavy and 
extensive bombing. Last week the 
Secretary of State called the North 
Vietnamese attacks in Laos and Cam- 
bodia a clear indication of the failure 


39 



They had to leave Liberty 


of their military activitv in South 
Vietnam.*' The Secretarv of Defence 
said that the air raids ” have 
the primary empha.sis of protecting 
the remainitig forces of Americans that 
are in Vietnam today " and he cited 
among the provocations that set off 
the raids a shelling incident in Saigon 
on December 19th and the construction 
of an infiltration road througli the, 
demilitarised zone. Mr Laird did not 
deny that the road he was talking about 
was built a year ago. The Washington 
Post pointed out that the shelling 
incident consisted of two rockets and 
no reported casualtie.s. 

Plainly enough the solid provocations 
were elsewhere and Mr Laird did say 
that December had seen more North 
Vietnamese attacks on American 
aircraft than any month in the last 
three years. Some of these attacks were 
on reconnaissance aircraft over North 
Vietnam, but there is also a new 
development : the North Vietnamese 
air force has been intervening in 
American bomber and fighter opera- 
tions over Laos and it seems to have 
scored a respectable number of hits. 

The Administration has always 
claimed that the “ understandings ” 
reached at the time of the bombing 
pause in 1968, permitted American 
reconnaissance flights to continue over 
North Vietnam, but it has never 
claimed that they covered air warfare 
over Laos. Since 1968 the battle for 
Indochina has shifted, dying down in 


40 

South Vietitam and flaring up vi^ 
rously in Cambodia and Laos. But die 
Administration is sensitive to the 
charges of liberal critics that it has 
merely shifted its bombing effort) It 
remains plain that with his pdirical 
needs and his strategic policy pulling 
in different ways, President Nixon is 
having to resort to the demonstrative 
use of air power against the north to 
bridge a widening gap. 

John comes lately 

Mr John Lindsay, the Mayor of New 
York City, flew to Miami this week 
to announce that he would be a 
candidate for the Democratic nomina- 
tion in Florida’s presidential primary 
in March. He then flew on to make a 
similar announcement in Wisconsin 
where party members get their chance 
in April to elect delegates to the 
nominating convention and to show 
their preferences among the presidential 
candidates. It might have been more 
becoming in so new a Democrat (Mr 
Lindsay was a life-long Republican 
until five months ago) to have held 
his horses longer. But he and his 
advisers feel that his candidacy must 
be shown to be serious without further 
delay. 

Mayor Lindsay has immense assets 
to offset his late start and low standing 
in the opinion polls : personal glamour, 
articulacy and sincerity in his claim 
to speak for those Americans whom (in 
his view) Washington ignores. He is 
also an accomplished television 
performer. This is as well, since his 
personal appearances in Florida and 
Wisconsin are likely to be restricted to 
weekends. Even this week’s flying trip 
is being criticised in New York as 
neglect of the city’s business coming, 
as it does, when the threat of a tran- 
sport strike on New Year’s Eve hangs 
over the city and as the state legislature 
is meeting in special session to decide 
budgetary matters which affect the city. 

Governing New York City is not only 
one crisis after another ; it is also 
dangerous politically. Perhaps the most 
serious allegation v;hich Mr Lindsay 
has to face just now is that he knew 
as long ago as 1967 that corruption 
was widespread among rhe police and 
that the police department’s investiga- 
tiori of it was half-hearted ; yet he did 
nothing until last year, when he 
appointed the independent Knapp 
Commission to consider the evidence. 

Mr Lindsay has also taken a knock 
over the ]ohn V. Lindsay Associations 


AmiRIOAN'SUlViY 



Lindsay : taking on more trouble 


set up in each of the city’s five boroughs 
to rally support and money for the 
mayor after he had been re-elected as 
a third party candidate. There was 
nothing wrong in doing this (although 
at least one association accepted 
contributions from firms doing business 
with the city) but the mayor’s aides 
fought an injudicious and, in the end, 
fruitless battle to evade the state law 
which requires political organisations to 
submit reports on their finances. 

Moreover, Mr Lindsay, who has a 
splendid theoretical grasp of urban 
problems, has long been accused of 
being a poor administrator and judge 
of men. Recently an ugly scandal in 
the municipal housing rehabilitation 
programme has underlined this weak- 
ness and state hearings on the 
workings of New York City’s govern- 
ment, due to start in a few weete, may 
press the point home even harder ; 
Governor Rockefeller is no admirer of 
the mayor. What may cost Mr Lindsay 
most politically, however, is his failure 
to get on good terms with the trade 
unions even though the city employees 
have done handsomely while he has 
been in office. 


Bell off the hook 

The Federal Communications Com- 
mission cannot regulate the biggest 
company within its jurisdiction. TTic 
head of the FCC’s common carrier 
bureau admitted this last week when 
he announced that the commission 
has abandoned its attempt to investi- 
gate in depth the expenses, invest- 
ments and purchasing policies of the 


tini KOMOMBT JAMVMV 1,1974' 

American Telephone and Telegraph 
Company, which runs the Bdl System, 
supplier of most American telephone 
services. The FCC is charged with 
regulating the rates that AT&T 
charges for interstate telephone calls 
(intrastate rates are regulated by state 
authorities) . In order to make decisions 
on rates, the FCC needs to know how 
much it costs AT&T to supply the 
service. But from now on, as in much 
of the past, the FCC will just have 
to get this information from AT&T 
itself. The common carrier bureau, 
with an annual budget of $3 million 
and a staff of 152, cannot match 
accountants and economists with 
AT&T, with annual revenues of $17 
billion and a staff that is now 
approaching 8oo,0(JO. 

Well-informed or not, the FCC will 
none the less continue to determine the 
level of profit which AT&T is allowed 
to earn on its interstate investment. 
And that is still by no means high 
enough to please the giant telephone 
company, faced with the job of raising 
$35 billion, much of it from external 
sources, to meet its five-year pro- 
gramme of expansion. In 1967, two 
years after it first announced its 
Investigation into AT&T’s rates, the 
FCC ruled that the company might 
earn only between 7 and 7.5 per cent 
a year on its interstate operations. Last 
January, when AT&T asked to be 
allowed to increase the charges for 
trunk calls for the first time since 1953, 
it begged the FCC to raise that ceiling 
to 9.5 per cent. Otherwise, the com- 
pany’s executives declared, AT&T 
could not retain its superior credit 
rating or attract the capital necessary 
to restore Bell telephone service to its 
once-high standard. No final decision 
has yet appeared. 

AT&T, under great pressure to find 
new capital, has come up with an 
ingenious arrangement for obtaining 
$t billion from external sources. It 
will sell $625 million worth of non- 
convertible preference shares and 
$375 million worth of as-year notes 
to 16 institutional investors, chiefly 
insurance companies. AT&T will pay 
dividends and interest at a rate of 
7I per cent on both. This enables the 
company to acquire a large sum of 
capital without diluting the earnings 
of other shareholders too much and 
without increasing its ratio of debt 
to equity. But it remains to be seen 
whether AT&T’s common shares, now 
selling at around $43, cah regain the 
height of around $75 which they held 
in 1964 before the FCC's orif^nal 
investigation was annowaced. 


ttm itaemiim iairmiy i, I97t 


AMlMdAM SimVBY 


4 « 


Pushing preacher 

PROM A CORRESPONDENT IN CHICAGO 

When the Rev. Jesse Jackson, the most 
widely admired oivul rights leader in 
the north if not in the nation, took his 
economically oriented Operation Bread- 
basket out of its parent group, the 
elderly Southern Christian^ Leadership 
Conference based in Georgia, he ended 
his letter of resignation by describing 
himself as “ the Country Preacher.” 
But it was apparent that from now on 
Mr Jackson would have to be even less 
the old-fashioned preacher and more 
what he has been trying to be in the 
past four years — the toug^, canny 
manipulator in urban affairs. 

Mr Jackson’s squabbles with the 
SCLC, Isugely led by old-line rural 
southern Baptist ministers, were 
inevitable. Breadbasket lias achieved 
only moderate success in solving 
a few of the social problems of 
northern, city-dweiling blacks. But 
some gains were made, largely through 
Mr Jackson who set up a trade fair 
in Chicago called Black Expo to bring 
in both black and white money and to 
give a start to black businesses. The 
SCLC was not satisfied, however, with 
the financial contributions that it 
received in 1971 from Black Expo, 
which was supposed to turn over all 
of its profits. While there was no 
.suggestion that Mr Jackson himself 
might have misappropriated any funds, 
his explanations were vague and in 
early December the SCLC suspended 
him as Breadbasket's national director. 

The causes went deeper than Mr 
Jackson’s disinclination to co-operate 
with the leaders of tlie SCLC. He has 
built an organisation in Chicago of 
young lawyers, social workers and 
ministers and his swinging style is not 
that of the Rev. Ralph Abernathy, 
who took over the reins of the SCLC 
after the assassination of the Rev, Dr 
Martin Luther King, Jr, in 19^. The 
succession was a logical one. Since the 
early 1950s, black preachers from Ac 
.south had been Ae core of Ae civil 
rights movement. Ibcy were flam- 
boyant in language (as is Mr Jackson), 
dedicated and brave. They were able 
to letul because in the souA Ae 
minister is one of Ae few menibers of 
the Nfgro community vAo cannot be 
intimidated by Ae white power 
structure. A field hand or a domestic 
servant who campaigns against racial 
discrimination will trften find himself 
or hersdtf out of a job ; Ar preacher 
is answerable only A his flock. 

Young Mr Jackson first met Dr King 


i9^5i while the younger man was 
still in primary sdtool, and said 
later that he determined even Aen to 
devote his life to Ae struggle for black 
equality. In 1965 he followed his 
leader’s star into Chicago. Dr King 
vowed to prove Aat Aere was as much 
racism in Ae cities Of the north as in 
the towns of the souA. He made his 
point easily by demonstrating for open 
housing in all-white Chicago neighbour- 
hoods, wihere he and his followers were 
stoned and spat upon. Mr Jackson wsu 
by Dr King's side in all of this, a close 
aide and personal friend. Indeed, he 
was wiA Dr King when he was 
murdeied in Memphis, Tennessee. 

Both leaders knew from Aeir 
experience in Chicago Aat Ae thrust 
of their long-term efforts in the norA 
had to be different from the old ways 
in the souA. The country-preacher 
approach, alAough the rhyAm of its 
ibetoric still had a strong appeal, was 
wasted on such political leaders as 
Chicago’s Mayor Daley. The enemies 
there were not red-necked deputy 
Aeriffs and voting registrars. They 
were political satraps who kept blacks 
in ignorance of everything but how to 
vote for the organ’ ation’s candidates, 
trade union leaders whose membership 
was white and who wanted no Negroes 
(•mpeting for jobs, an impersonal 
technocracy which had little use for 
untrained, unskilled hands, prejudice 
that kept blacks from buying houses 
in Ae city’s white districts. 

Dr King made a few inroads against 
these new enemies ; later Mr Jackson 
made more and, after Ae death of Dr 
King, many blacks and whites looked 
to the young national director of Opera- 
tion Breadbasket to step into the slain 
leader’s shoes. It did not happen, for 
reasons that are still disputed. But 
perhaps Ae main reason was that there 



jMkMon ; wftMt 


was no longer a need for a single 
Messial; As elsewhere in American 
society, tlie movement had become 
diversified ; specialists were what was 
wanted now. 

Two weeks ago in Chicago Mr 
Jackson launched a new organisation 
to be called People United to Save 
Humanity (Push), at a rcvival-like 
mass meeting in an old movie theatre, 
wiA all Ae fervour that his followers 
hang on. “ Nature requires that wc 
eiAer grow or die,” said Mr JacLson. 
He is the recognised leader of Chicago's 
activist black community and has the 
backing of many nationally known 
Negroes ; even so, it was unclear 
whether he could rally his supporters 
to do more Aan turn out for meetings 
or whether his search for political solu- 
tions to the ever-pressing economic 
questions of the blacks could possibly 
be successful in the most politically 
inflexible city in the United States. 


Enter right wing 

President Nixon has fieen a dis- 
appointment for some of the right- 
wing Republicans who voted for him 
in 1968. His good conservative 
credentials have lieen shattered one 
after another by his China policy, his 
overtures to Moscow, his d^cit 
budgeting, his new economic policies 
and his plan to give the poor a fixed 
minimum income. This “leftward 
drift ” has proved too much for Repre- 
sentative John Ashbrook of Ohio : he is 
challenging Mr Nixon in several of Ae 
Republican primaries (in whidi the 
voters inAcate Aeir preference among 
Ae possible presidential candidates), 
including the fiist one in New Hamp- 
shire on March 7th. 

The White Hou.se is taking 
the challenge calmly. President Nixon’s 
campaign strategists believe that Mr 
Ashbrook will help the President by 
flitting Ae anti-Nixon vote with 
Ae literal Republican contender, 
Representative Paul McCloskey. Few 
of the Republican party’s leading con- 
servatives are rallying to Mr Ash- 
brook’s calb. Governor Ronald 
Reagan and Senator Bairy Goldwater 
are at present firmly in the presi- 
dential camp, although Mr AshbrocA is 
expected to get some support from 
Mr William Buckley in his nu^azine 
Ae National Review. But for Ais con- 
servative pubheatbn, and probably for 
Mr Ashbrook himself, his candidacy 
is more a way of reminding President 
Nixon of the right wing than a 
serious drive for the White House. 





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so you nmc youn 
be s l ee pin g alone tonlghtt 



This drawinfp of the Dermatophatroides Pteronyssinus-mafirnified approxima^dy 200 times-was taken from a microjihotopfraph. 


The house dust mite, as he’s continuing research effort, a small happy ending. Happy for the 

called, exists in your cupboards, research team looked for a compound researchers. Happy for Ksons. 

your carpets, your bed-everywhere. which would give prolonged But happiest of all for all those 

He’s so small you can hardly see him protection from asthma. After many people throughout Europe who 

with the naked eye and yet,along tentative steps,such a compound suffer from asthma. Or used to. 

with flower pollen,cold air and was eventually synthesised. It’s dedication like this that is ; 

irritant air pollutants, he^s believed Then came years of tests and earning Fisons the recognition apd 

to be one of the causes of one of the reformulations to make the respect in Europe that it has 

greatest miseries the human race compound safe for continual use. commanded for so many years in 

knows: asthma. Obstacles fell slowly. Britain. 

The story of Ksons heavy The original team of two was 

research investment into the rapidly increased. Further 

preventative for asthma l^egan over adjustments and tests seemed ne^ 

1 0 years ago. ending. But the whole project - 

As part of Fisdhs past and expense, time, frustrations -> has a 

Zug'laip, 


AtHB 


4 SURVEY 


THS RWMokiST JANUARY 1 , 1972 


Europe^ Greatest Newspaper 


FijU' (F Eiiropu's preat newspa]')eis have joined 
enik:,. ]jO Monck,’. lia Stanpja, DnEWelt and TheTimes. 
All ,-'ii:tt!oritd‘r;f,' newsij'.ifxn's that can comment on 
mip<.utanr isaues in Einojoe. 

Aii jjapr-rs that iipeak to tlie influential people 
,n thou rr‘S|H;'rti VO countiies, 

A smies ol joint S].)ec!a] Reports 'vviJl be published 
in ;e7:; on issii<;s and jn oblems relating to Europe 
amd itie Eue.'pcNin. TTie first one. 'Ehiropean Unity 7 
apjM.'ars 7 > i 'elnuary, 1 972, 


Each jjdfier will contnijut* <i shaie ol ilu; 
matoTial and will |n.ibii;d! idenncai oditcjri.d ano 
ri d 'V e r 1 1 s 1 1 1 cj .s i n 1 1 1 1 1 <nn u .s 1 \’ 

This means that SAOO.iieO ot Euojpo s must 
inllmaitial people will be emovinc: the oonilsneo 
'larencitlm ol thess' ney.’spa}.^fuse And you can 
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Phone the Advertisement Director of 
your country's newspaper. 





iHB BCOMOMIST JAMOAKY I, 1973 


SURVEY 5 


Now more than ever you 
need the plain facts about 
the Common Market. 


• what it is and how it works 

• what it does and what it 
plans to do 

• what has been agreed with 
the United Kingdom . 

• what will happen in the 
transitional period 

• how British industry and 
agriculture expect to be 
affected. 

For the answers to these 
and other questions- 
straightforwardly presented 
and up to date— you need the 
Midland Bank’s comprehensive 
Factual Guide to the Common 
Market. 

Midland Bank 

A Great British Bank 


It should be on every 
businessman's desk; and can 
be, free, by sending the 
coupon below. 

To: The Panel for Overseas Trade 
Development, Overseas Brancn, 
Midland Bank, Room bC 
60Gracechurch Street, 

London EC3P 3BN. 

Please send me 
free a copy of your 

Factual Guide 
to the Common 
Market. 


Name 

Position 

Organisation 

Address 


I ... J 



And remember, in the field of finance and international trade, 
whatever the need the Midland Bank can meet it. 


6 SURVEY 


THE l^NOMIST JANUARY I, 1972 


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THE EOONOMIST JANUARY I, I972 


SURVEY 7 


EEC: a common market for Alfa-Laval 

After years of frustration and negotiation, it finally looks as if the age of 
being at sixes and sevens is ending. Odds are now on a Market of Ten with 
trade agreements for others - unless a wheel comes off. At a time when 
some manufacturers are worried at the prospect of finding new demar- 
cation lines between themselves and their markets, it feels good to be an 
international concern. 


A foot on both sides of the fence 

Alfa-Laval, having had international 
operations from the beginning, has fol- 
lowed the doings of Marketeers and 
Antimarketerrs with keen interest. But 
not with anxiety. It so haj)ppns that 
our Group Head Office and twelve of 
our global total of thirty-five factories 
are located in Sweden. But we also 
have six factories inside the present 
Conmiunity (three in Germany and 
one each in I'rance, Italy and the Neth- 
erlands) and six more in prospective 
member countries (four in Denmark 
and two in the UK) . 


An international and 
interindustrial market 

What do they all make? Milking ma- 
chines, industrial centrifuge's, heat ex- 
changers, pumps, tanks, and a diversity 
of other hardware. 

The list may sound ill-assorted, but 
in fact is far from it. All these products 
are components of Alfa-Laval-eiigin- 
ecrecl production lines and processes. 

Like dairy farms with mechanised 
arrangements for feeding, milking and 
manure renmval. Push-button multi- 
product dairies. Automated continuous 
breweries. Complete slaughl(!rhonscs 


and floating fi.sbineal factories. Ditto 
starch and fruit-juice factories Si)ecial 
process cxpiijnnent for the rheniical and 
pharmaceutical industries. Heating and 
cooling systems for all die above and 
many more application.s including ma- 
rine proj)iilsion and nuclear power 
])lants. We could go on for quite a bit 
longer. 

The name of the game is process 
engineering. Under this same heading. 
Alfa-LavaFs R^^cD people are deeply , 
involved in topical probNuiis like find- 
ing now .sources of edible protein and 
new methods of environmental control. 

World-wide sales 
Alfa-Lava! s network of subsidiaries, 
agents and licensees covers more than 
iOO comitries. 'To an organisation on 
that scale, tariff w^alls and curtains of 
various figurative materials are some- 
times a bore but seldom a barrier. 

In 1970 A!fa-Laval sold more than 
£12r) million worth of eciuiprnenl and 
know-how’, distributed like tliis: 


EEC 2B.5 % 

EFTA 36 % 

N ^ S America 20 % 

Rest of World 15..')% 


Seventy ])er cent of the equipment sold 
in the six (Common Market countries 
w as made in those countries. 

What kind of a Common Market 
would Alfa-Laval like to see? 

The bigger the better. But whatever 
the Market looks like after the diLSt 
has settled, it will still be a market for 
Alfa-Laval processes and equipment. 
Just like before. 


oc ALFA-LAVAL 

Group Head Office : Alfa-Laval AB, 

S-147 00 Tumba, Sweden. 

In UK ; Alfa-Laval Co. Ltd., Gt. West Rd., 
Brentford, Middx. 




^ 8 SURVEY 


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I 



THE ECONOMIST JAWAEV I, 197^ 


EEC 


smvBY g 


From enemy she became lover 



New Munich stands outside old 
Munich, itself destroyed by allied 
bombs but now rebuilt. Lost in this 
new Munich’s glass and concrete cor- 
ridors stands a modest row of semi- 
detached houses, whose improbable 
name is Torquato lasso Strasse. Who- 
ever named that street must have been 
a European romantic wanting to dress 
up the common market's rather drab 
prosperity. Perhaps he was thinking of 
Tasso’s heroine in the “ Liberata,” 
Armida, who advanced with hatred 
in her soul on the sleeping Rinaldo, but 
then without explanation or warning : 

di nemica ella divenne amantc. 
From engniiy she became lover. At 
the root of the dccidely unroinantic 
commercial construction of the com- 
mon market lie two such sudden 
reconciliations, After the war the 
Oerinan Armida embraced France. 
Now, even more suddenly, neo-gaullist 
France has cnibraced the not exactly’ 
slumbering Rinaldo of Bexlev, 


The fight inside Britain over whether 
to “ join Europe ” has been and still is 
bitter ; but little thought has been 
given so far to what will happen if the 
pro-Europeans win, or indeed to wliat 
is already happening in a much 
changed Europe. I'he purpose of this 
survey is to remedy that. Both the 
present and the probable futures seem 
far from what most pro-Europeans 
originally expected. In “I'he Phoenix 
is short-sighted ” (The Economist, 
May 16, 1970) Norman Macrae des- 
cribed the argument to which v\^c have 
all now become inured : 

The greatest debate in British histoiy at 
present seems to be conducted mainly 
between inaccurate pedants and unspcci- 
tic romantics. The pedants argue against 
a decision that will affect our descen- 
dants for centuries by composing wholly 
erroneous micro-economic equations 
based on the 1969 off-farm price of 
butter. The romantics try 10 waft us 
into a huge but little-discussed con- 
stitutional change i»n trailing cloud.s of 


purple guff. 

The lime for micro-economic equa- 
tions and ]mrple gulT has since been 
left behind. Changing the dollar's 
value a fortnight ago against every 
European currency lias wilily-nifly 
thrust Europe's nations closer together. 
Today British entry begins to seem a 
minor event. That paradox has been 
put in an exaggerated way by Mrs 
Miriam Cainjis : 

Within the span* of a few weeks thi.s 
past summer Mr Nixon announeed that 
iu* would shortly be visiting the 
People’s Republic of China, . . . two 
astronauts rode around on the surface of 
the moon in a contraption looking not 
unlike that used by the less athletic 
breed of golfer, and the United Stales 
blew a gaping hole in the Bretton Woods 
structure that has served as the frame- 
work f(jr the economic relationships 
among most of the non -communist parts 
of the world for the past 25 years. The 
three events having, apparently, nothing 
to do with Europe have, in all prob- 
ability, a good deal more to do w'ith the 



10 SURVEY 


EEC 


THE BdONOMIST JANUARY I97II 


shape ot Europe in the decade . head 
than has rhe onr event [British entry] 
ostensibly designed to make a major 
impact on the character of the Euro- 
pean consi ruction. 

This survey does rtot indulge much 
in geopolitics, ft concerns itself only 
with Europe and only with the next 
few \ears — ^with the immediate after- 
matl). *n other words, of the belated 
completion of British entry, and of the 
.equally belated watershed in postwar 
history crossed by President Nixon last 
August 15th and December 20th. 

The first of these, the 'impact 
of British entry, could splinter Europe 
furtlici or be the making of it. The 
second. Mr Nixon's home truths last 
Augu.st, opens up the que.stion of how 
easy Europe will find life with fewer 
and less ceriain economic and military 
guarantees coming to it from America. 
The tenipiation field out bv both 
events is for Europe to return to its 
old divided wavs, trusting to luck that 
the past 27 years of peace and plenty 
have somehow been ordained by a 
nuclear god to last for ever. 

Agenda for change 

This survey will look at the changes in 
the nature of wot VI commerce whicli 
British entry into ine common market 
will confirm. It will also look at how 
Europe will use the ei onoimc influence 
which its wealth give^ n. in an econo- 
mic world whose big members begin to 
resemble competitive carbon copie.s of 
one another with little loom left for 
trading give and take. Britain brings 
a financial way of looking at business 
that could make London into Europe’s 
New \'ork, and Europe con.sequently 
into a more real economic entity than 
Brussels alone could create. 

Then the uncertain future of 
Europe's relations with the super- 
powers, notably with America and 
therefore with the Soviet Union, will 
have to he considered. This in turn 
raises the problem of Europe’s security 
and defence. 

All these together suggest that 
Europe will function at all only if the 
chemistry of its politics and self- 
interest is enough to bind together 
tho.se nationalistic atoms of Germany, 
France and Britain which have spent 
centuries flying apart. The success of 
this triangular relationship will prob- 
ably decide all. 

It will not be achieved in Brussels, 
whose place as an autonomous centre 
of power is open to doubt. So, before 
plunging in, let us first dispel this and 
other common market myths. 


What the EEC is not 


Perhaps all of us most of the time have 
been mi.sled by the common market’s 
own inner contradictions. Its first myth 
is to call itself Europe, when it is in 
reality a self-centred customs union, 
plus a self-centred farm policy, put 
together by increasingly self-centred 
individual governments. Its joint insti- 
tutions are jjeopled by romantics who 
are older than they were when the EEC 
was born in 1958, and whose idealism 
grows old with them. Most confusing 
of all, the common market exists, is 
indeed the only remotely likely pan- 
European structure in existence, and 
yet what makes it attractive to late- 
comers like the British is the fact that 
it barely does exist at all. The Euro- 
pean Economic Community (to give it 
its founding name which Brussels, 
typically, has now changed to the more 
grandiose, less accurate “ European 
Community”) is an infant creature, 
barely formed. The point of elementary 
schools, says Paul Goodman, the 
American education!^, is to undo 
the damage done at home, so the child 
can begin to breathe again and be 
curious.” With Britain joining, both 
the Six and Britain are about to leave 
home and go to school to mature 
together. 

British entry, the consequences of 
the Nixon package, the Franco- 
Cjerman argument have combined to 
make a busily ineffectual shambles of 
the common market at the very 
moment when everyone had expected 
that the EEC would be allowed to go 
into a sort of collective chrysalis, 
inside which might be generated the 
European butterfly everyone has been 
waiting for. Instead, that chrysalis is 
being smashed open before the meta- 
morphosis of the creature inside has 
had time to take place. The sight of 
big countries squabbling is entertaining 
for journalists and anti-marketeers, but 
for very few other people. The second 
myth among Europeans is their half- 
boast, half-complaint that Europe sinks 
these difrerence.s best when faced by 
outside threats. Hungary, Suez, fear of 
American military withdrawal, sheer 
distrust of lohn Foster Dulles's con- 
tacts with Khrushchev over Berlin, are 
.said to have helped to get the Treaty 
of Rome off the ground by 195,8. 
Likewise the invasion of Czechoslovakia 
in 1968 is supposed to have helped 
persuade de Gaulle that the time was 
come to talk to Britain again. Or so 
the argument runs. 

Nearer the truth is that the Treaty 
of Rome got off the ground as the 


truncated commercial relic of a much 
grander dream — a political and defence 
community — and then more by virtue 
of Franco-^German accord than because 
of the existence of an outside threat. 

Even this latest year of achievement, 
1971, owes little to outside threats. The 
Six’s agreement on an experimental 
try at monetary union was reached last 
February in a time of relative monetary 
calm. And when it was confronted by 
a threat from outside it immediately 
fell apart. It was settled in the first 
place by a Franco-German deal. And 
it fell apart when France’s and 
Germany’s interests fell apart. Equally, 
British entry was in the end not 
achieve because of the pressure of an 
outside threat. It was achieved more 
by the internal arguments (some of 
them strictly commercial and vote- 
catching) which were at work in France 
after de Gaulle, and it was achieved 
more particularly by the revived 
French neurosis about the gathering 
political strength of Germany. 

“ You ask what the common market 
is to us ? ” said the man from Siemens. 
“ It is very little more than a machine 
for making words.” It is a harsher 
judgment than the men in Brussels 
deserve. But it exposes a third myth, 
the confederal and even federal dreams 
of “ voung men ” now in their forties 
and fifties who grew up on the gradual- 
ist approach to a European ideal put 
forward by Jean Monnet, Rolxirt 
Schuman and Paul-Henri Spaak. The 
tale in Brussels is now no longer, as 



Half a miracta for Mormot 



THE ICONOMIST JANVASY I, 1972 


SURVEY II 


Our European 

set-vm 


When you want to set up your business in Europe, use the 
Brandts European set-up. We have a special way of providing 
you with the necessary plant and equipment. This allows 
you to employ your resources for other important purposes 
like setting a hot pace for the competition. 

We call it Euroleasing. 

Euroleasing may be new to you but it’s not new to us. We 
have had wide experience of helping to solve business problems 
in Europe. And Euroleasing is just one of many sophisticated 
leasing techniques whose development we pioneered. Today, 
Brandts Leasing provides world-wide facilities for UK and 
international companies with requirements of £100,000 
and upwards. 

The service can also give manufacturers a powerful sales 
weapon. For througl|i Brandts they can offer their customers 
the benefit of pre-arranged leasing terms. 

If you need to know more about Euroleasing, please get in 
touch with Mr. G. H. Dodsworth, Director, Wm. Brandts 
(Leasing) Limited, 36 Fenchurch Street, London EC3P 3AS. 
Telephone: 01-626 5900. 

Landis Leasing 

A Division of Brandts the Merchant Bankers 



IS SURVEY 


TH1£ BOONOMIST JANUARY t; tQjii 


BBA is causins a 
great deal of ffnction 

inJIussia 




BBA is expert at calling a halt while 
driving ahead. For the Group produces 
friction materials which help to stop 
and move vehicles and machinery. 
Textar, the BBA West German subsidiary and 
sister company of Mintex, makes brake and 
clutch liners. It is currently providing Russia 
with specialized plant and know-how for a 
big brake liner factory and, until this goes into 
production, with a steady flow of brake liners 
as well. This year, Textar will cause enough 
friction to stop many thousands of Russian- 
built Fiat cars. 

Textar also supplies to all the West German 
motor manufacturers and many others 
throughout the world. 

BBA is big business in many languages. 
The Group has subsidiary companies all 
over the world with total sales which have 
tripled over the past nine years and are now 
running at over £36m. a year. 

BBA's activities are so diversified that it is 
well protected against big fluctuations 
in market demands. BBA products include 
non-friction reinforced plastic bearings and 
bushes, conveyor and drive belts, mechanical 
handling equipment, and asbestos and glass 
fibre products for insulation and flame-resistant 
applications. 

BBA companies are well known but the 
Group name may be less familiar. So we 
have produced this advertisement to help 
put that right. 


uMrrao' 


- needed by evenf industry 


BBA Group Limited, Cleckheaton, Yorkshire 

Mintcx Lid Scandura Ltd * Cressweli’s Asbestos 
Company Ltd • Sovex Ltd * Versil Ltd • Regina Glass Fibre 
Ltd ■ Comprehensive Computer Services Ltd • RailkoUd 
Marshall Handling Equipment Ltd • Overseas Subsidiaries 
in West Germany * USA • Spain • Canada • France 
Australia * South Africa 



m luommtlKt fuman t, 


«u 


SURVIY 13 



Mato, EEC, WEU, CowieU of f urapa— w/rfeft /a ft today 7 


Scaliger would have wi^ed, “dealing 
with the praises of brave men.” 

The dreams of the 1950s are gone 
partly because the 1950s are gone. 
They were, as Mr Callaghan said this 
October to the Labour party in 
Brighton, admirable ideas in their 
time. As usual when he is power- 
broking, Mr Callaghan made half the 
point. Ilie other half is that as the 
result of those dreams the EEC now 
exists in a somewhat different form 
from the old hopes people had for 
it. The day is receding when Europe’s 
soverei^ nations will allow ithe E^’s 
institutions to become sovereign instru- 
ments for a federal power. 

A rule for newcomers 

What is and will be confusing for the 
newcomer is that the EE£, precisely 
because it is such a slight creation thus 
far, will be described to him in quite 
different terms by different people. As 
a bright young Frenchman in a place 
of considerable common market power 
answered when asked whether, in die 
middle of a Franco-German bust-up, 
the common maiket could any longw 
be said to exist : “ So lon^ u we all 
keep talking about it, it exists.” Those 
hoping to fathmn die common market 
should start with a single rule : never 
take on board what diey hear or read 
from Brussels imtil the idea has been 
thoroughly checked out in the national 
oqiitals. It almost always turns out to 
be different in Paris, Bonn, Rome and 
Ha^, which is s^ere the deci- 
sions and the deals are made. 

siflviy WM vvritiMi by 
Ambwiv Kniglit. 


Not another America 

A final myth is to imagine that Euro- 
pean unity will owe much to the 
pattern set a century before by the 
United States of America. That Ameri- 
can pattern, so fine at the fume, is an 
illusory one to copy today. America is 
having to cope wi^ the fact that free 
and capitalist continents, even when 
they speak a single language (which 
Europe does not), are not easily run by 
a single rentral government. The one 
telling point which the British Conser- 
vative party’s pet anti-marketeer. Sir 
Derek Walker-Smith, has made all year 
was when he taunted the majority 
lined up against him at the party con- 
ference with the remark : “ Super- 
power does not seem to bring 
super-happiness, does it ? ” 


Europe has the resources to become 
an actual superpower but its people 
are increasingly unwilling to allow &is 
to happen. Why ? Rightly or wrongly 
Europe’s people do not fear invasion 
from outside. Rightly or wrongly they 
lose btde deep over ^e notion of being 
won to communism by Moscow- 
financed subversion. Rightly or 
wrongly west Europeans, though they 
may cordially detest many of one 
another’s policies, no longer expect to 
go to war with one ano&er. 

Lastly, what made America one were 
the frontier tensions and racial legacy 
which led a northern, and later a cen- 
tral, federal power, at a certain point in 
American history, rightly to impose its 
will on socially r^ressivc, disorganised 
and hopelessly under-financed local 
“ states.” A social need for one western 
Europe does not now exist. If that 
need did exist some people doubt if 
the establishment of a European 
government would be the way to satisfy 
it, for it would be further removed 
from the plain citizen than are the 
already over-complex national govern- 
ments in Europe today. Today’s mood 
is very much against more bigness and 
centralisation. The myth of the 
dreamers is to think a single entity 
is being built. What is being built is 
a base of common interest which may 
one day be an entire construction of 
Iwrmony. According to the Oxford dic- 
tionary, harmony is a “ combination of 
musical notes,” not, as harmonisers in 
Brussels often seem to prefer, a angle 
boring sound. 

The place to start building a base is 
at ithe bottom ->50 let us turn first to 
farming and economics. 


Power without responsibility- Europe's trade 

Exports and imports 1970, figures in $ Mlion 



Excluding intra-^trdding 



14 SURVEY 


BBC 


The facts of life 

Britain accepts two and a half economic facts of EEC life when it joins 
the Six. They have to be seen as a whole. The first, a worrying one for 
Britain, is the Six's common agricultural policy (CAP). Next, Britain will 
join a customs union inside which no tariffs on industrial trade exist, and 
which (unlike Efta—~the European Free Trade Association to which Britain 
has belonged) applies a common external tariff against industrial imports 
from outside. Lastly, Britain faces the unknowns of European monetary 
union— -an experimental plan to link the parities of currencies in the Six, 


The cost of 
the CAP 

Europe’s common farm policy, the 
CAP supports rtie prices -cjf most 
European farm products at common 
levels well above prices in Britain and 
the rest of the world. The* coinmon 
farm policy aims to rid Europe of 
national competitions to subsklisc 
fanners, while at the same time creatmu; 
a civilivsed standard of living for 
medium to small fanners who proli- 
ferate in the Six. Its first snag is there- 
fore that the CAP .soaks consumers and 
affords a ritzy life to big, efficient 
fanners. Second, the CAP has no way 
of preventing overpi eduction in any 
one year — unlike America’s system of 
production quotas which rewards 
growers richly by rigging supply, but 
which at least also aims to avoid 
unsaleable .surpluses. In short, Europe's 
is an open-ended commitment to buy 
whatever its farmers grow at a pre- 
ordained price. For this to work, 


imports of food into Europe are made 
to compete over a levy which is varied 
in order to maintain a price advantage 
for domestic European farmers. The 
result is that there is no way in which 
prices can respond (downwards) to an 
imbalance lie tween supply and demand. 
Ihis leads, as night to day, to dumping 
surpluses abroad, or to stockpiling over- 
priced food at home — notably the 
earlier hut now melted mountain of 
butter. 

It also gives rise to much jiggery- 
pokery as, for example, when butter is 
turned into mayonnaise and back into 
butter as it is shuttled in tankers back 
and forth across the continent. 
Humorous reports also have it that the 
commission has lately been tempted to 
buy disused churches in Czechoslovakia 
in which to store this year’s huge 
harvest of grain. 

The sums of w'hat the CAP will cost 
Britain are commonplace. Britain is the 
largest net importer of food in the 
world. And its fanners are more 
efficient than many on the continent. 
This means that Britain will pay more 



THB jAiira^y lii ligp 



TliK 


A<1KU ( i1 1 ni- 


ft was much the same in 1845 

to the common fund in Bru,'>sels to sup- 
port prices tlian it will get back. The 
net balance of payments cost to Britain 
was originally forecast at £105 million 
in 1973, ri.sing to £200 million by 1978. 
Thereafter Britain goes over to a system 
of automatic contributions to Brussels 
designed to make the EEC’s central 
budget independent of national whim. 
This will mean handing over to Brussels 
90 per cent of all customs duties and 
food import levies on imports from out- 
.side tlie EEC. (Both these may actually 
be falling in Britain by 1980 as its trade 
switches to the excise-free “ internal ” 
market of the EEC.) Of more interest, 
up to I per cent of all members’ value- 




Interested in trade or investment in the 
Common Market ? 

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l€ SURVEY 


AOVERtlSEMENT 


Teesside- 
the future 


The Teesside Regional Organisation for 
Indimnal Development— T.R,O.LD. exists 
to serve companies wishing to move to or 
^pand m the area. Past results have shown 
that TROID efforts have been well 
rewarded, and the industries who have 
moved have not had cause for regret. 

Jt 4S apparent why this should be so 
when one considers the Regions advantages. 

, * location of the region embracing 
the Tees Estuary in the north and Whitby 
m the south and some 613 square miles 
OT co^tryside and conurbation, places 
Teess^e in an ideal spot for communication 
with Europe. 

* Teesside is one of the leading indus- 
trial centres of the country. Four industries 
dominate the local economy j iron and 
steel, heavy engineering, shipbuilding and 
chemicals and petrochemicals. 

Approximately a fifth of the U.K.’s iron 
and steel is produced on Teesside. A new 
t^ic oxygen stcclmaking plant is in opera- 
tion, a new iron ore terminal which will 
accommodate 1^0,000 ton ore carriers is 
under construction and the British Steel 
Corporation k seriously considering Tees- 
side as its “Crownfield” site for a huge 
integrated steel making complex. Two ship- 
building yards, are controlled by the Swan 
HuiYter Group and the complexes producing 
chemicals and petrochemicals, particularly 
of I.C.I. at BiJlingham and Wilton, are 
among the Ipgest in the world. 

I.C.I. also jointly operate a refinery with 


Phillips Petroleum of Oklahoma and Shell 
refinery close to Teesport. 

3 New light industnes coming to Tees- 
side are developing on industrial estates 
or parks as we now see them in view of 
their environmental standards. 

By far the larg<^ of our industrial parks 
in the Region is the Teesside Industrial 
Estate managed by the English Industrial 
Estate Corporation on behalf of the Gov- 
ernment. TTiere is still more than adequate 
accommodation for incoming firms, and a 
wide choice of industrial parks operated, 
either by private developers or local 
authorities is available. 

Without doubt the choice of advance fac- 
tories in key locations can certainly help 
firms who have to expand quickly, and 
indeed, the success of at least one industrial 
park has been partly due to the provision 
of advance factories. Rents start at about 
40 pence per sq. ft. per annum. 

4 Land is also available for heavy indus- 
try- In particular some 1,300 acres are 
being reclaimed from the sea at Seal Sands 


on the northern side of the estuary. 
Approximately 200 acres of land arc recov- 
ered each year. 

5 The Teesside Region is served by a 
comprehensive range of communications. 
The A. I. motorway passes through the 
western part of the Region and this will 
soon be followed by another more central 
north-south route, the A. 19 which is now 
being converted to motorway standard. 

In the n^r future, three east-west routes 
will provide access from the new A. 19 
to ail parts of the built-up area. Not only 
is Teesside’s existing road pattern relatively 
free fr<m congestion when compared with 
the Midlands and the South-East but it 
will soon be complemented by an urban 
motorwa) programme. 

The road system is backed up by other 


THE ECONOMIST JAlHjARV' I, 


first class communkartion facililies. British 
Rail provide fast intcr-city trains linking 
Tcessi^ wi^.all the leading cerstres of 
the UK and Freighthnen Ltd., who have 
a terminal at Stockton. Overseas freight 
services operate regularly from Teesport 
to North America, Rotterdam, Copenhagen, 
Sweden and Finland. 

In addition, Teesside Airport is one of the 
most modem in the country and possesses 
first class facilities. At the moment British 
Midland Airways operate three services 
every wekday to and from London. An 
air freight is also available. 

6 The present employed labour force is 
some 200,000 strong. There is available 
in addition, a labour pool of some 1 2,000 
males and 2,500 females. Approximately 
one third of the available males is skilled. 
The problem of improving the skills of 
existing unskilled and semi-skilled labour 
IS being tackled by Goverament Training 
Centra in Teesside which can produce 800 
trained men a year. 

The population of the Teesside Region 
(excJudiiig Darlington and Hartlepool) 
was just under j million in 1966 and is 
expected to grow to at least 600,000 by 
* 99 * 4nd probably to 650,000 depending 
mainly on future trends in natural increase 
raites. 

Nw shopping and office developments are 
under construction, and the suburbs of the 
conurbations are as pleasant as in any 
other town or city in the country. If more 
rural surroundings are preferred, the several 
sea-side resorts, villagw, hamlets and coun- 
try towns of the region provide a varied 
selection of locations. 

This is the Teesside R^on, where oppor- 
tunities for commercial and industrial 
development go h^d in hand with oppor- 
tunities for a rich and satisfying life, 
unequalled anywhere else in the country. 



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prime building aitea, attractive government arant?tnrf factor 

to get your gooda quickly to vour rSw pS™- “ 2^® “mmunicatli 



THtt seo^lowr j^nMinr i, 1972 


BBC 


SURVEY 17 


British farm prices catch up 

British farmgate prices as % of EEC prices 


^1967-t0 

0 20 


40 


11971 

60 


T“ 




80 % 100 


Pigs 

Milk 




Sugar beet 




Cattle 




Soft wheat 


'ZIZ 

s 



Swrcffs Kiel Institute. UK Min of Ag .EFC complied by NIESR 


added tax (Vat) may be gathered in 
by Brussels as and when it is needed to 
pay for farm or other policies. 

The British estimate of a bill of 
£200 million net in the late 1970s 
may now rise because Europe’s curren- 
cies are now on balance worth more 
pounds than they were last summer. 
The bill may rise again if the cost 
of supporting farm prices in the CAP 
rises abruptly from its present level 
of 2.6 billion old dollars (£1.1 billion). 
Equally, Britain could use its muscle 
in Brussels to get new common policies 
adopted — common technology projects, 
industrial aids are among them — which 
would bring more into Britain from 
Brussels than they cost. In this way 
the availability of Vat revenue to 
Brussels could prove to be Britain’s 
biggest opportunity to get something 
out of Brussels by the sort of budget- 
fighting at which Frenchmen and 
Italians are already adept. 

Either way, the early years will see 
Britain carrying a load on its balance 
of payments which might have proved 
harsh in any postwar year but 1971. 
There may also be a balance of pay- 
ments price to be paid on the extra 
cost of food imports, though higher 
British farm production and changing 
consumption patterns will, by our 
estimates, make this negligible. The 
combined balance of payments cost, 
plus the impact of Europe’s higher food 
prices phased in over the next six years, 
will put a burden on Britain’s real 
resources. Guesses at this overall cost 
vary wildly. 

Rarely does anyone pipe up on the 
GAFs bdhaH. For reasons of history, 
France, Gennany and Italy found 
themselves with more of their people 


on the land than modem economics 
allows, and condemned by the force 
of local politics to keep them there by 
wasteful nationa] subsidies. Prices 
common to all Europe were therefore 
devised high enough to make their life 
tolerable, and low enough (it was 
ht^d) to encourage marginal growers 
to leave the land vnthou't repeating 
the pain of the British enclosure move- 
ments centuries before. 

“ Science without conscience is but 
ruin of the soul,” said Rabelais. 
Britain’s European conscience-money 
(and the cost of joining so late) will be 
its contribution to solve the continental 
farm problem. However, Britain must 
fight harder than its Foreign Office 
currently means to do to keep fami 
prices down. The Six’s useful feat 
in the past four years has been to peg 
these prices near enough their original 
CAP levels to keep up a decent exodus 
from the land. This annoys their far- 
mers, but in this way the Six’s fanning 
families may by the 1980s number 
between 5 and 10 per cent of their 
populations, compart with 8-ig per 
cent now. Steady farmgalte prices in 
Europe have already closed the gap 
between food prices in Europe and in 
Britain. Indeed it is arguable that 


Bri!ti»h food prices will not be higher 
at the end of the transitional period in 
1978 than they would have been any- 
way outside the CAP. 

So successful has been the drive to 
keep the Six’s fami prices down at a 
time when other costs have been 
rising in Europe, that the flight from 
the land in the Six — notably in France 
— ^has begun to accelerate. The Six’s 
highly politicised farmers are becoming 
very awkward. Britain should therefore 
also seize on a growing awareness near 
■the top in Paris that to denude the 
French countryside at British and Ger- 
man expense is not necessarily the best 
thing for France or for French poli- 
ticians, despite the labour requirements 
of France’s industrial ambitions. So, 
Britain should not just keep common 
farm prices down but advocate dif- 
ferential farm prices backed up by 
local subsidies in place of the present 
bureaucratic vision of uniform farm 
prices throughout what is a pleasantly 
non-uniform continent. Britain, in 
short, must use the CAP as the first 
battleground on which to fight against 
the Brussels yen for harmonisation for 
harmonisation’s sake. Harmonisation 
has not, in tire CAP as it stands, fos- 
tered harmony. 


Britain's industrial backyard 


British entry into Europe confirms a 
fact of industrial life in the world. Like 
it or not, the free world is now divided 
into three industrial blocks — ^America, 
Europe, Japan-Asia. In varying degrees, 
all three are protectionist. None of the 


three, contrary to popular belief, has* 
relied on “ export-led ” growth to 
markets outside their own regional 
backyards. The most vigorous of them, 
Japan, has depended on the unenviable 
social passivity of its own people to 


Britain turns to Europe 

I 

1958 

Tefal £3326 mn 


UK EXPORTS 


I 

1970 

Total £8063mn 





t8 SURVEY 


EEC 


Tho Six keep going faster 

% annual c-ompound growth in 
. manufacturing productivity 


% 



[[|l960-70 1^1968-70 ^1962-70 []] 1965-70 



...by more trade with each other 

SliiiK ol lot il ( (innumplKiii of nnruil It lull's 



Etc 

intra trade 


n Olhpr I lOurTtestK 
inioiHt, L Joutpil 


0 % 20 40 60 80 100 

f T ^ 1 T 


BHqiuin 



hance 




68 |iLi 


Gi^rmaiiy 


1954 

58 

68 



Holland 



SouriB UN ^puibork monthly bulletin OfCD ECt iwtiontl oi it 
and le^earrh by IdvMn M Truman all tompiUd by NltSH 


THE BOONOinST JAlttMAV t, 


create an industrial dynamism inside 
itself. This has enabled it in turn to 
use its increasingly undervalued cur- 
rency in order to compete with stun- 
ning advantage in America — but even 
now Japan exports only 6.9 per cent of 
its gnp outside its real “ home iriarket ” 
of Japan, other Asian countries and 
Australasia. America’s exports plod 
along at about 4 per cent of gnp, 
giving Amencan governments the nice 
advantage of being able to retreat 
aggressively 'into their shell during any 
world monetary fracas. Exports of the 
Six outside their own customs union 
have declined as a proportion of their 
total trade, while the growth of their 
trade inside their shared “home” 
market has both increased their total 
trade and sharpened their export prices 
(see charts). 

Until now, Britain has felt this same 
pull to big, nearfiv legional markets, 
but without getting the benefits which 
It might bring. Britain now sends nearly 
a quarter of its exports to the Six, emu- 
pared with under 14 per cent m igijS. 
Its exports to the tiny non-British areas 
of Efta and Ireland have grown even 
faster By contrast the growth of British 
exports to distant places like the coun- 
tries of the Commonwealth has 
vyithered 

Britain’s aim now is a simple one : 
to put Itself on an equal footing in 
what is already its largest, fastest grow- 
ing market, getting into this untilled 
patch of its trading l)ackyard, but 
bringing as much of its existing prefe- 
rential territory in with it as it can. 
This simple aim will have unsimple 
results. In return for free trade inside 
the Six, Britain will now share with the 
Six its former preferences in its third 


laigest single customer, Ireland, its 
preferences in the countries of Efta, 
and its preferences in those of the poor 
countries of the Commonwealth who 
decide to take up the Six’s offer of 
association or trade agreements. 
Further, Britain will share with all 
these countries its new preferences with 
the Six countries of the common 
market. In addition British industry 
will lose its preferences in South Africa 
and in the prosperous Commonwealth 
countries of Australia, Canada and 
New Zealand. Trade with the rest of 
the non-Commonwealth sterling area, 
notably the oil counptries of the Middle 
East, will barely be affected cither way 
bv the change in tariffs. Over the five 
years to 1978 when all this will be 
done, Britain will also align its existing 
tariffs against outsiders with the com- 
mon external tariff (CET) used by the 
Six. Most often (as the chart of 
examples on page 31 shows) this will 
mean a unilateral cut in its overall 
tariffs by Britain. 

It is tempting to throw oneself back 
into the struggle l)etween economists 
arguing over whether this will hurt or 
harm Britain in the end. To do so 
would be to cross swords on a baittle- 
field of fantasies, in which one would 
doubtless end up like others expressing 
without admitting a prejudice (for The 
Economist, m favour of going in). 
Further, this battle has been badly con- 
fused all along by the shorthand which 
academic economists have to use when 
they necessarily limit themselves to 
studying the aggregates of international 
trade. It is simply not possible or 
plausible to construct a model massive 
enough to include the multiple effects 
of multiple changes in tariffs here and 







-mt boomomuIt jAMUAav i, 1978 


SURVEY 19 



That certain smile 


High top speeds are not always 
associated with good acceleration 
and powerful torque. Many a driver 
has been misled by the speedometer 
in his car. In a BMW the top speed 
is just a by-product. Engine power 
and supreme performancS at any rev 


count are the importantthings. So that 
BMW drivers can go the way they 
choose. Like overtaking other cars 
within a matter of seconds. Or letting 
others go first. After all, it’s easier to 
give in if you have the better car. 
Powerful cars have superior drivers. 



For sheer driving pteasure-BMW 

i 

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40 StntVBY 




Mcmta^s 

The merdiant bankers 
for Europe 


Samuel Montagu & Co. Ltd., 114 Old Broad Street, London, EC2P 2HY 

T elephone: 01-5^ 64M 

European Representative Oflice: 33 Rue GaliUe, Paris XVIe, France. 

Associated Banks 

Switzerland, Cuyerzeller Zurmont Bank A.C., Ccnfentrazte 6*8, Zurich 8027. 

Belgium, BanqucEuropdennede Credit iMoyenTermcSA., 36 Avenue dm Aril, BmMfh 1040. 

Australia, Capel Court Corporation Ltd., Capri Court, 370 CriHni St, Mdboumc, Victoria 3000. 

Malta, Malta Internationa] Banking Corporation Ltd., Regency Home, 254 Kln^ay, Valletta. 



rat pimjjiia^ i, 1972 bbo 


there which, moreover, far from being 
the average tariffs used and quoted by 
journalists, in fact vary from product 
to product and from sub-product to 
sub-product inside each industrial 
sector. Perhaps the most intelligent 
remark to come out of all last year’s 
outpourings was that by S. S. Han and 
H. H. Liesner of the Cambridge 
Department of Applied Economics. 
The effect of entry into the common 
market, they concluded, “ is not a 
matter of right - across - the - board 
strength of some sectors accompanied 
by marked weakness of others, but 
rather of each sector having its more 
promising and its relatively vulnerable 
parts.” 

All the Six had misgivings about 
their similar uncertainties 14 years ago. 
They all, as Norman Macrae descried 
20 months ago, quickly overcame them. 


Frenchmen, whose combination of fears 
in 1958 most closely resembled Britain’s 
today, recall with high good humour 
how “ vraiment terrorisis ” they were 
at the outset by the might of German 
and Dutch industrial power, and now 
admit how wrong they were. 

Britain joins later than others, the 
shock may be greater, and it carries 
from the outset die burden of the CAP. 
However it also joins with a far more 
real insurance policy than the major 
founder-members had in their day. 
The EEC will collapse altog^her if 
Britain cannot bear the strain. If 
Britain falls ill after entry, no doubt 
exists in any European mind that 
measures will either have to be found 
to cure it — by favours on trade, 
exchange controls, or changes in the 
CAP — or else the EEC will have to 
give up the struggle and disband. 


As far and as fast . . . 


The half<^Hcy which Britain adopts 
with entry into the EEC is the Six’s 
scheme for economic and monetary 
union. This strange episode in EEC 
affairs shows it at its bravest and 'least 
wise. And it is far from over yet. Last 
February, following two months of 
Franoo-Geitman fury with each other, 
the Six stitdhed together an admirable 
politicall compromise which contained 
a dangerous economic theory. Starting 


in June 1971, the Six’s five central 
banks (Luxemburg does not have 
one) were supposed to lock the values 
of their currencies closer to one another 
than to the currencies of the rest of 
the world (as the accompanying dia- 
gram explains). If this worked over an 
experimental period, then in the later 
1970S the parities of the Six would be 
locked immutably together, giving rise 
perhaps by 1980 to a single European 


Europe takes the tube 

WHAT HAPPENED UNTIL AUGUST 


Until wme of them floated, all membera 
of the tntamatioiMl Monetary Fund agreed 
to maintain their ourrencies either 
side of their parity with the doiiar. In 
praetic* most countriee set their interven- 
tion points about 0 . 75 % either side of 
the dollar. This meant that any currency 
could ftuotuata by 1.6% against the dollar. 

J AM curranciae ere quoted only against 
lie doNar, not agalnet one another.) Thus 
when the Deutaohemaric fluctuated up from 
the bottom by 1 JS% and the Italian lira 
fell from the top by 1 . 5 %, the two had 
fluctuated agninst each other by 3 %. This 
was inconvenient for the EEC's common 
farm policy, end the Six hoped to scrap it. 

Fnrni teat June, the Six planned to keep 
all their own exchange rates witiiin 00% 
ehher side of $ parity. To show the effect 
more oisiiriy, our example (see middle 
chart) shows the Six kemng their 
curreneiw within a ring* of 1% of one 
another'evafue .eseiost'^a doiler. SoifUie 


-AND NEXT YEAR? 


Kra was 0.6% beiow the dollar, the msrx 
would not be allowed to go more than 
GS% above the dollar. Thus the maximum 
swing that any two common market cur- 
rencraa would experianca against each 
other would in a single shot be reduced 
from 3 % to 2 %. This would mean the 
central banks agreeing regularly, perhaps 
weekly, where to pitch their common 
centre spot against the dollar. This, and 
the whole tube containing the six cur- 
renoias, would shift up and down. 

Most foreign exchange operators make 
their profits in the forward markets (when 
these are working), where ratea are 
broadly determined by interest rates and 
the likelihood of parity changes. But the 
narrower band would allow m six curren- 
ciaa lass latitude. Foiwa^ caiculetions on 
each individual currency will have to take 
account of uncertain and more frequent 
central bank intervention In Europe, rather 
than etreiaht market forces. This ehowe 



SURVEY 21 

\ 



" / have seen many potiticians. Karl 
Schiller plays all registers with more 
fascinating skiil than any ” (German union 
boss) 

currency. This would almost certainly 
have meant Germany lending heavily 
to Prance to keep the value of the franc 
up near the German mark. Accom- 
panying this ” monetary union ” there 
was to be a measure of “ economic 
union.” The Six undertook to 
co-ordinate the timing and to compare 
notes on their national budgets and 
fiscall policies, the French having suc- 
cessfully fought off any tougher rules 
that might give Germany a say in res- 
training P'rancc’s growth rate in return 
for financing its future trade deficits. 
In return a formula, devised by Herr 
Karl Schiller of Gennany and M. 
Raymond Barre of the commission, 
would have allowed Germany to with- 


+2 5% 


. WHAT ABOUT AFTER THAT? 



"2 5% T 


dramatically in the last chart where ft is 
assumed that the IMF has permitted bands 
to be expanded (as many would like) to 
2.5% either side of the dollar parity. 
the Ika is very weak, so weak that the : 
five central bankers of the Six decide they 
will have to let it fall by more than 1% 
below its official dollar parity if they are 
to avoid losing massive dollar reserves* 
This would pull the mark below parity too 
(see chart), even though the German 
balance of payments might at the fime 
be in heavy surplus and the market in 
marks very strong. In any system still tied 
to central dollar parities, this would make 
forward dealing laaa easy to predict. 




simvBY Bib 



Thr^ minds with a different thought : Schiller, Giscard, Bank of Ital/s Carli 


draw from the plan between the third 
and fifth year if it did not like the way 
it was going. 

The S 90 heme never got off the ground 
because the gathering dollar crisis 
smashed it last suinmcr. But it lives on 
in the European nwnd. In a neat piece 
of sceptid'Sni, Mr Anthony Barber 
committed Britain as far back as 1970 
to “go as far, and as fast” as the Sax 
in implementing it after entry. 

For any ardent European, monetary 
union is terribly attractive. 'Fhe com- 
mon farm policy lias repeatedly faced 
ruin since 1968 when currency specu- 
lation has threatened its common price 
structure. On three occasions, the latest 
of wliich 'is still going on, common farm 
prices have been made farcical by a 
panoply of special border taxes and 
subsidies to repair the damage done 
to fanners’ incomes by floating or 
altered exchange rales in Europe. “ Our 
CAP was built on ice,” says a Dutch- 
man, “ and it’s melting.” Gerrn'any has 
even suggested enslirining such national 
measures inside the CAP for good, a 
sure road to the destruction of Trance’s 
ark of the covenant. Real monetary 
union would iniake this unnecessaiy. 

Next, monetary union was to have 
been (and could yet be) a move on the 
grand scale towards real economic 
integration in Europe beyond mere 
tariff-free trade. Most of the EEC’s 
oth^r good intentions have gone by the 
board. Transnational mergers by 
European companies inside Europe 
have been few, the most successful and 
the majority of multinational corpora- 
tions set up in Europe since 1956 being 
American. If a unified European com- 
pany law ever emerges from the 
<tephant 4 iouse of blueprints on the 
.Inject, it promises to be a political 


mouse, of little practical use as a 
vehicle for industrial rationalisation 
across European frontiers. The dream 
of a technological community recedes 
daily in Europe’s collective memory ; 
growing overcapacity an the aviation 
industry, in heavy electricals and in 
computers makes it less like'Iy than ever 
that national governments will throw 
open tenders and research contracts to 
companies from other members of the 
EEC. If and when such industrial 
partners'hip comes it will be the result 
of individual governments knocking the 
heads of their industrialists together — 
for example in the (Jefence and com- 
puter industries — not of some pan- 
European plan. Real monetary union 
in Europe could change all this at one 
stroke. 

Lastly, monetary union couild force 
on Europe the common front in its 
international monetary dealings which 
has so far been patently lacking. In 
the Six plus Britain have the 
resources and the votes to be the 
arbiters of change (over and above 
new parities) in the International 
Monetary Fund. But have they the wiill 
to do it ^ 

Euromark? 

This survey is written as the changes 
to Bretton Woods called for last August 
by President Nixon are at last coming 
up for settlement. Whatever changes 
are made in the monetary system may 
sadly make little difference to the more 
lunatic aspects of Eurt^'s monetary 
plans. These have now been refined 
since Hast February by both Herr SchiJ- 
ler and President Pompidou. TTie 
German economics minister claims that 
he would make German reserves 
available to support an unSimited joint 


woommst jumim iy 197* 

float by ail Europe’s cunendes, or else 
a joint European float between much 
wider international parity bands. This 
would probably mean inventii^ some 
“ pivotal ” value by which European 
currencies would be related to one 
anodier, and which would be only 
linked indirectly to the value of the 
ddlar. And it would involve creating 
a central banking network in which 
each national cenltral bank would co- 
ordinate its market intervention in the 
cunenaies of one another. 

In turn, the French president, 
though rejecting a joint European float, 
has conceded that for any such joint 
scheme to work some sort of central 
nerve centre will have to he set up to 
manage reserves and decisimis between 
the central banks. In addition, all but 
the Gennan.s reckon that the flow of 
Eurodollars through Europe would 
wash away these delicate plans unless 
national access to the Eurodollar 
market is controlled even more than it 
already has been since the summer. At 
around $60 billion, the size of the 
Eurodollar market almost overshadows 
the money supply of any European 
nation. The need to isolate this simu- 
lative nitroglycerene before it “ weeps ” 
and gets dangerous has induced other 
imaginative ideas for monetary union 
which go beyoiKl anything envisaged so 
far. Thus Dr Giovanni Magnifico of 
the Central Bank of Italy (always 
Europe’s best breeding place for mone- 
tary ideas) suggests in a Princeton 
paper that a new European unit be set 
up alongride Europe’s national curren- 
cies, to replace the dollar as a medium 
of intervention, as a reserve unit and 
as a source of multinational capital to 
be given preference over the dollar. 

Manifest snags 

'Fhe danger in these notions is manifest. 
Monetary union is not only a useful 
way for Europeans to leapfrog the EEC 
over the political hesitations which 
prevent fuller economic integration. 
Monetary union also directly threatens 
national political contnd of economic 
policy, of consumer demand and there- 
fore of votes. It is thus easily seen by 
the visionaries as their bid to achieve 
supranationaUsm by Uie 'back door. 
This may not be a bad aim in itself. 
But in its name EEC members would 
have to agree to lock themselves to 
fixed exchange rates vis-k-vis one 
another— in other words the EEC’s old 
predileeflion for “harmonisation” in 
its most dangerous form. InunutaMe 
exchange rates assume conimon rates 
of growth, common rates of inflation 
and common rates of prhduclivity, or 




rm tmomut jmufv t, *97* 


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We always try to be a little more Inventive than others 

We search for new methods of corporate finance, without discarding 
the well established ones, we mediate in mergers and acquisitions, 
we advise on investments, we deal with all money and credit matters. 




We will finance, for example, your tulip transactions. 

We wouldn’t advise tulips as a portfolio Investment just now, although 
they were actively traded on the Amsterdam Exchange in 1637, 
when one single bulb brought a price of thousands of guilders. 

PHP has ofRces in the four largest cities in Holland, 
on Curagao and in Indoneaia. 


PHP Is associated with a.o.: 

New CkMjrt Securities Ckirporation, New York 
Rothschild Bank A.Q., Zbrich 
Rothschild Intercontinental Bank Ltd., London 
Bondtrade, Brussels 

European Financial Associates N.V., London 





There's more than oneway 
to grow big and strong. 

Try Mackenzie Hill’s industrial property development course. There’s a million one going strong 

at Louvres. Ten miles north of Paris near the eity’s third international airport, Roissy-en-France, and on the 
main conununication route to the U.K. and the Benelux countries. 

A lot of space has already been taken by a major subsidiary of Gervais-Danone - France’s leading food 
manufacturer. As well as by people like Dragoco, G.T. & £. and a leading Parisian food wholesaling group. 

They’re all setting themselves up in one of the hnest industrial trading estates in northern France. But 
this is what you can expect when you contact Mackenzie Hill about property in Europe. They can offer you a 
IJickage deal service either on one of their own estates or on a site selected to suit your own particular needs like 
the recently completed developments for subsidiaries in France of Coates Patons Limited and Glaxo Group 
Limited. 

The sites they develop are carefully selected to be in growth areas - with good communications, labour 
resources, and essential services. The financing, planning, design and construction are brought together by the 
Company and the end product made available to you on a rental, leasing or freehold basis. 

And they’re active in offices too - a 70,000' office development in central Paris has recently been let to 
Rhone-Poulenc and over 100,000' of office accommodation is in course ofdevelopment in Paris and northern France. 

If you are thinking of property in France and Europe, Mackenzie Hill can make things a lot easier for 
you - whether you want offices, factories or warehouses, draw on the expertise of the European property people, 
^Mackenzie Hill. You’ll find they’re developing all the time. From strength to strength. 

^Mackenzie 

PROPERTY FOR INDUSTRY 

r 43 Lower Belgrf ve Street, London SW1 W OND. 

' Telephone: 01-730 0244 

RteekenzieHillSA 

20 Rue St. Didier 75. Paris 16*. 

Telephone: 010 331 704 3285. 




TECHNICAL LEADERS 


SNAM PROGETTI s Engineers leading protagonists of now realities, have left their mark 
all over the world with works in the field of pipelines, petrochemical, refining and many 
other types of plants. SNAM PROGETTI's men and ideas have developed the new technique 
of large projects, thus giving an original contribution to the research and plans resulting 
now in 2b 000 kilometers of gas and oil pipelines. 

in hundreds of refining and petrochemical plants and in 180 kilometers of submarine piping. 
SNAM F^ROGETTI a reservoir of men and brains serving the times. 


SNAM pnoomi 


LNl Group M097 Sen Oonaio Naly 

ENOINCfiRING AND SUPPLY OF RfFINfcRiES. 
PETROCHLMICAL AND NUCLEAR PLANTS 
Oil AND GAS PIPELINES. CONSULTING 
TECHNICAL AND SClCNTIflC RESEARCH 


SPN 2496 



EcbmiiiiST jaMary if ^ 


SURVEY 37 


at least an equal mix of all three. Or, 
more Kkely, they assume that France 
and Britain, for example, would be 
wililing to restrain their growth so as 
not to get out of line with Germany, 
so institutionalising the present econo- 
mic imbalance in Europe. 

The economic logic of big integrated 
markets is that production gravitates 
to the centre, and then, as the centre 
fills up, to the sun and the south — 
not a tolerable notion for Britain unless 
it can (1) remain free to alter its 
exchange rate arxl (2) be able to beef 
up its regional incentives to entice new 
industry to its decaying north. Euro- 
pean rules should not be allowed to 
outlaw such national prerogatives 
unlless a European government could 
first be seen to exist with strong enough 
powers to even out these imbalances 
by regional controls. Otherwise 
Britain’s fate wiM be that of West 
Virginia or northern Indiana in the 
United States, where economic union 
similarfy ran too far ahead of real 
federal control. 

Bluntly, no such all-seeing federal 
power remotely exists in Europe. 
What will be needed, therefoie, is not 
destruction of Europe’s monetary 

Linking with the Ten 



ambitions, but a dose Briti^ realism will be in fact to alter their “ European 
in their realisation. Which at this stage parities ” whenever they see fit. 
basically means that Britain and others what fool is not so wise, 

should feel as free as they undoubtedly To lose an oath to win a paradise. 

David Ricardo is dead 


These two and a half facts of life in 
the EEC together add up to the least 
appreciated reality of Europe’s econo- 
mic existence This is that even in its 
present primitive state, integration in 
Europe’s economy has gone far enough 
to outdate many of the old theories of 
world trade. The protagonists of those 
old theories were the liberal inmates of 
the Kennedy Administration in 
America, the supporters of Gatt (the 
General Agreement on Tariffs and 
Trade) in Geneva, of OECD (the 
Organisation for Economic Co-opera- 
tion and Development) in Paris and 
their like. They included the original 
economic theorists of the EEC itself. 

Their belief was a noble one. It was 
that free world trade would be self- 
.sustaining. It would lead, they thought, 
to fruitful specialisation and competi- 
tion between rich <* 'untries, and to the 
provision of investment and jobs in 


f>oor countries with cheap labour on 
tap. The laws of comparative advan- 
tage, much sophisticated but derived 
essentially from Ricardo, would 
govern all in an agreeably even-handed 
manner. This has not happened. Since 
the Kennedy round of tariff cuts world 
trade has jumped all right, but in a way 
which lias discomforted many, notably 
the United States. The reason for the 
current bout of protectionism is not that 
Americans have simply turned nasty, 
the Japanese obtuse and so on. It is 
that with freer trade and with the rise 
of Japan and Europe, the theories of 
comparative advantage have finally 
fallen flat on their face. 

The factors of production at large 
in the world today are no longer as 
immobile or as few as they once were 
assumed to be. The least mobile 
(Ricardo’s only) variable factor of pro- 
duction, labour, is nowadays also the 




I EFTA assocMtis plus 
I Finltnd b Iceland 
I Maditerranaan 
I aiaociatas 


PREtfNT AFRICAN ASSOCIATES \ 


Burundi, Cameroon. 

Contral Africm Ropuhiic. Chad. 
Congo-Branavillo. Congo-Kinahoto, 
Dahomay, Babon. Ivory CoitL 
Modapaicor. Mali, Mauritania, 
Nigar, Rwanda. Sanagal. Somalia, 
Togo, Upper Volta 

Amelia 

Kanyo. Uganda, Tanzania 





- 4 ^ 

30 ^ 


EASTERN 

EUROPE 


ranoau^ 




TMOtAOKfHiMTS 

Israel, Jugoslavia. Labanon. 
Egypt Iran, Uroguay, Argantlna. 
India. Pakistan, Ceylon. Malaytia, 
Singaport 


NEW FULL COMMONWEALTH 
ASSOCIATCS 

Jamaica, Trinidad & Tobago, 
Barbados. Guyana. Gambia, 

Sierra Leone. Ghana, Malawi. 
Nigeria. Kenya. Uganda. Tanzania. 
Zambia, Botswana. Lesotho. 
Swaziland, Mauritius. Fiji . Tonga. 
Western Samoa, 




Mmcmoi praiteten 



SS SURVEY 


Anything two can 

A steady moan goes up from Europeans 
that thdr big multinMional companies 
arc neither big nor multinational 
enough to meas^^e up to the Americans. 
The mergers diat have taken place have 
mostly been inside national frontiers. 
Agfa-Gevaert, Fokker-VFW, AKZO- 
Glan2Stoff, Dunlop-Pirclli and now per- 
haps Hoogovcns-Hoesch, arc about the 
aum of big transfrontier mergers since 
1958. The usual reasons given for this 
sad state of affairs are that unequal tax 
and accounting arrangcnients inside 
Europe make mergers difficult, and, 
further, that petty nationalism has pre- 
vented enlightened notions for a single 
European company law being bom. 

Three more real barriers exist 10 
transfrontier mergers. First, Europc’.s 
big national companies (like Ameiica’s) 
prefer to control themselves what they 
buy abroad. More and more this has to 
do with dividing and ruling the labour 
unions which have been slow to work 
together effectively across frontiers, but 
which now shows signs of doing so. 


EEC 


do 

Second, cross-frontier mergers are 
resented by national govcniments; thus 
Fiat has had to take Citrrien by the 
back door of Swiss-held shareholdings, 
having failed to get the full government 
permission for a “ merger ” it wanted. 

Third, the antitrust operators in the 
Brussels commission have tangled the 
whole .subject up in double-think. Their 
latest action against Continental Can s 
wish to buy a Dutch firm can be con- 
sti'ued as an anti-American move, but 
none the less damages the European 
ambitions of Britain’s Metal Box com- 
pany. The commission’s uneasy dealings 
with the synthetic fibre cartel in Europe 
begs large questions about how that 
industry wili compete with Japan. And 
the steel and coal authority which 
start(5d its days stopping steel mergere 
now seems to be egging them on. This 
is an area of pan-European commercial 
practici" badly in need of a clearer 
think after Britain joins and after a 
new commission is appointed in 1973. 


least important. The factors of produc- 
tion which matter am all now highly 
mobile. Capital, thanks to the dollar 
and the dexterity of multinational com- 
panies and banks, is highly mobile. 
Management skills — notably marketing 
and cybernetic stock and production 
control — ^are highly mobile. Above all, 
technology is highly mobile. Neither 
America, nor Europe, nor Japan any 
longer has a technical lead in making 
old metal-bashing products like motor 
cars. Once all trade restrictions were 
removed, them would be little to pre- 
vent such antique machines being 
manufactured by the million m coun- 
tries where people are still poor enough 
to want to work night shifts. In 
advanced industries like petroc'.heinicals, 
electronics and physics, the patents 
taken out to protect new inventions 
barely last long enough it) g( \ them 
into pnxluction. Or if they do, they are 
liberally and quickly spread round the 
world by the coqjorate economics of 
licensing which outweigh even quite 
high levels of tariffs. 

The strange thing is that these les- 
aons had already l:)een learned by 
American academics 40 years ago from 
the experience of what was then the 
only big integrated market in the 
world, America itself. In America the 
speed witJi which labour and capital 
moved quickly ironed out the advan- 
tages of specialisation ; new investment 
in America since the war has not 
rfiased cost advantages, hut govern- 
ment contracts and the sun. llte 
Iree^trading fraternity has long been 


familiar with the work of Ohlin and 
Heck.scher in the 1930s. and 1940s, and 
of Leontief in the 1950s. But not until 
recently has it seemed to realise that 
the flow of capital, of management and 
of know-how to Japan- Asia and to 
Europe has made the two of them 
into regionail blocks which can, like 
California from New York, crib the 
necessary expertise and do the job 
themselves. Tliis does not mean that 
world trade has had it, far from it. 
What it means is that it has to be 
managed. A country like Japan would 
have no difficulty in a tariff-free world 
in building up industries capable of 
flattening existing “ advanced ” indus- 

For faint hearts 

None of these; grand economic visions 
of British entry' allay the fear which 
many British businessmen have al)out 
goling inito Europe at all. Holding its 
declaiied common from in favour of 
enftry all last year was not an easy 
job for Britain’s Confederation of 
Bri'Ckh Industries, Many of its .smaller 
rneml>ers and some of its big ones 
would liave preferred to rat. Only in 
some cases does this sort of protection- 
ism add up to what Canning Kked to 
call “ a farrago of cowardice, cunning 
and cam.” For someone with pneu- 
monia, a cold shower is a thing to be 
cowardly about, and worth deploying 
cunning to avoid. 

A good tonic for a man facing battle 
is to be aware of the fears of the other 


THE ECX>NOMI$T JANUARY 1| 

tries in the other two blocks. And if 
exchange rates can be rigged effectively 
enough, the same thing may occa- 
sionally happen the otlier way round. 
Modern industries lose money when 
operating at anything much less than 
Ml stretcli ; they are, therefore, 
flattened quite easily by statistically 
small incursions into their markets 
from outside. Growth in the free 
world’s three big blocks is to this extent 
less “ export-led ” than “ import- 
threatened.” In other words, big-scale 
modem industries in each of the 
world’s three blocks can rarely reckon 
'to gain a long enough lead to enjoy 
the time necessary to recoup their 
investment in peace — not unless, like 
IBM, they can turn themselves into 
temporary marketing monopolies, which 
tlie rest of the world’s governments are 
unlikely to tolerate for long. 

It therefore begins to look as though 
what are effectively market-sharing 
agreements for steel and textiles 
arranged between the Japanese and 
Americans are signs of what is to come. 
In their trade with one another the 
three big econoimc blocks of the free 
world vyill tend to carve up their 
markets by agreement among one 
another. It was always a false idea 
that Britain might go it alone in such 
a world, hoping to maintain by 
exchange rate subsidies small-scale 
metal-bashing industries better sited in 
Algeria or Spain. Britain had to come 
into Europe from outside, because the 
economic pressures of being alone were 
more than it could expect to witlistJind 
in a world whose manner of conducting 
trade has fundamentally changed. Let 
us see what Britain’s industrial — or 
lather its finanoial— impact inside 
Europe’s regional economy will be. 

and brave 

side. Some in Europe, like the paint 
industry, fear British entry. Others, like 
the domestic consumer durable manu- 
facturers, are scarcely bothered. Others, 
like Fiat and Vdkswagen, frankly 
do not know which way it will go ; 
they agree with the opinion of Lord 
Stokes that imports of cars might quite 
quickly take a third or so of the 
British market. But their own cost 
problems' these days make them feel 
that a British Leyland now getting 
back on its feet should gain more in 
Europe than it loses at home. Much 
depends, all say, on whether Europe 
goes on catching the “ British disease " 
from Britain, or Britain catches the 
cure from Europe. In h»vy electricals, 
Siemens has done acad^c humewojrk 



survey 29 




^«,ST JANUARY I, *978 



3® 5UKVBV 



SJJjreiOIJK IBB 

nmsTERoiiin 






«AMMe,so„ 

t£i«v4., Kr‘^2~sr4«".?r»« 


Amsterdan. c. ' 


the 
north 


•sionattfij 




we///7e 






THE EGONOMrST JANUARY 1, I972 


EEC 


SURVEY 31 


showing how unexploited the Briitish 
market will be, but when one talks to 
the men in the engine room they 
jovially admit that every other attempt 
by Siemens to crack Britain has been 
a fiasco, and they see little reason why 
this should change now. 

Equally for every European business- 
man who incxins about Britain’s labour 
record, or derides its upper-crust 
caste of management, there is another 
who genuinely expects that a magic 



package called “ entry-into-Europe-Mr lets them protect their home turf when 
Heaith-standing-on-your-own feet is things gel too rough. They have grown 
about to produce the long awai'ted used to the notion that few go broke, 
British economic miracle. And for each ajnd that most flourish. They take for 
of them there is a third who reckons granted tliat no counlry in the corn- 
nothing will happen at aill ; “ it’s rather nion market w'ouM be allowed to go 
like the schoolboy riddle,” says one undei'. What inter(\sts them is a subject 
of 'these, “if one frog can jump one whicli shows how far along the road 
metre, how high can three frogs to beiing a genuinely conitinental mar- 
jump ? ” ket their expectations have come. 

The age-old debates about who wins, Before leaving the coinmerobl side 
who losf?s industrially, fnainkly weary of the EEC, this last subject —lx>ndon*'S 
Europeains. They have grown used to a place in Europe's barely existent capi- 
rnarket which encourages them to push tal.and money markets — needs to be 
and thrust where they wiant, and yet examined. 

The City as Europe's 
New York 

For a continental market trying to and turnover in London exceeds that 
make its way, Europe lias one big gap. in all the others put together. The 
It has no single, central capital market. London shoi t-tcrm money market 
To_ a surprising e.\tcnt, but in an oddly stuns Europeans who visit it; the 
vague way, it is tliis hnancial gap more matehing up of day-to-day and highly 
than any other which Europe’s big liquid money with sliort and medium 
businessmen expect Britain to fill. The term government and commerdal 
C!ity of London ei.joys a glamour which paper of every description is a thing 
no capital market in Europe has. without paraJlel in Europe. The liqui- 
Unlike the rest of Britain, it is dity of lenders and borrower.s in 
evidently prosperou.s, formidable and London is openly envied even in a 
go-ahead. Its stock market has profited sophisticated capital warehouse like 
on balance from the 1960s ; whereas Zurich. Money in Europe usually goes 
(see the diart on page 32) the perform- under the bed or into the bank. And 

ance of Eurojie’s bourses, particularly the man who wants to borrow that 

Paris, makes one wonder where all the money either does not bother or has 
EEC’s much vaunted growth went. to go into the bank, or sell out to the 

Britain is tlie land of the publicly state or to big financial holding 

(luoted company. The value of stocks companies. Europe has no gigantic 
quoted in London almost equals that insurance industry as Britain has, 
on all Europe’s markets put together, funnelling savings into every section of 



Old htt for the City, but not tor Europe 



33 SURVEY 


EEC 


THE ECONOMIST |ANUAKV ly ^973 


Where did Europe's growth goi 



the market. Many of its pension 
schemes arc not funded hut pay out 
to the old what they gel in from llie 
young. Such institutioiv^ an' anyway 
often required to jnit eiiunks of their 
money irnto state-run -investinents. 

It is little wonder, then, that a 
certain sort of tlhrsty European seevs 
London as an American- type oasis of 
money. Nor is it surprising that 
London’s merchant hanks and tliat 
supposedly numerous l)roed of British 
financial operators - all of them 
apparently called Mr James Slat<?r- - 
evoke a frissov of half expectant 
apprehension among Eurof.)r's more 
go-go lirokers and bankers. Londoirs 
feat during tlie igfios of taking (from 
a place outside the eoininon market) 
the leading i>art in the hurgeoning 
Eurodollar and Euiohond markets 
(which mostly help finance industry 
inside the cornnion market) lias 
increased this respect. “ When we 
started growing," says a director in 
the French chemical giant, T^hone- 
Poulenc, 

wc firsi saw the need for big modern 
intcrnational-sizcd plant. Wc got dial 
idea from America and Cicrrnaiiy. liien 
wc saw the need for numerate, inter- 
nationally minded management right 
down to a low level. Wc learned that too 
from America. Now' we see the need — 
even with our vast cash flow and ultra- 
conservatiivc accounting — for capital. 
That wc shall get from London. 
Romance is attractive. Then' has lately 
been a flurry of visits by European 
financial journalists to .see London at 
work. Several of Germany's regional 
banks arc now' actively considering 
Opening full branches in London, a 
development which the Bank of 


England, using its discretion over deals 
financed by outsiders in London, has 
encouraged. In the other direction 
a Belgian broker says, “ 1 liave seen 
more British brokers and bankers 
corning through iny office since the 
summer than 1 have; seen in years.” 
Britis4i insurance companies are 
already buying their way into Europe. 
'ITiere has been an t>utrrop of news- 
pa})er articles, conferences and speeches 
by British brokers and bankers. J'rench 
bankers hav'C methodically chased 
through British banking halls to find 
out what might be done. Hambros' 
connection with the Bastogi affair in 
Italy IS the aspen of that fiasco which 
ajrpeais to interest jieople most. The 
newspapers give prominence to any 
report that a Britisli institution may be 
buying into Germany. The most active 
Britons on the continent alr eady are the 
property men. 

In Europe tlie capacity for this sort 
of craze to make things hap[>en should 
not be ignored. Nevertficless several 
roadblocks stand in the way of London 
becoming Europe's New York. 

1) Exchan^nv fontrol. As part of its entry 
deal Britain and the Six will phase 
out restr'ictions on portfolio investment 
in one anothiT. European corn- 
pan ie.s distribute le.ss of their earnings 
than British cornfianies, and are less 
.shareholder-minded. This means that 
in ter'iiis of price-earnings multiples 
most European shares are undervalued, 
and one would expect Briti.sh hnancial 
institutions to invest more orr the con- 
tinent than hitherto. But if the outflow 
of portfolio investment from Britain 
became embarrassing the British 
authorities would doubtle.ss stoj) it. 
Equally European portfolio money is 
unlikely to come to London where 
yields are so low by European stan- 
dards, at least not until a sustained 
British equity boom is strong enough to 
tempt it away. 

After the August monetary crisis all 
Farropean countries have limited flows 
from one another’s currencies and from 
the dollar into their domestic money 
markets, riiough they arv now being 
droirped again, there can he little 
chance of London developing as a real 
European money market so long as 
such restijctions seem likely to return 
whenever ttiing.s get bad. 

2 ) The Eurodollar and Eurobond mar- 
kets, Laige as these markets are, they 
still only provide marginal finance over 
and above doine.stic savings, and then 
mostly to big companies, or state 
bodies. Their use is likely to be 
increasinglv circumscribed. The secon- 
dary market in Eurobonds is erratic, 


Public Eurobond 
issues 

Doals 

Deals 

managed & 

1967-Oct., 1971 

managed 

co-managed 

$ mn Rank 

$mn 

Rank 

Morgan & Cie 

1255 

7 

1764 

7 

Lehman 

770 

2 

1205 

7 

S, G. Warburg 

637 

3 

1642 

2 

N. M. Rothschild 

556 

4 

1328 

5 

Kuhn Loeb 

542 

5 

1188 

8 

White Weld 

521 

6 

1495 

3 

BCI 

428 

1 

1110 

9 

Smith, Barney 

395 

8 

664 

13 

Goldman, Sachs 

359 

9 

498 

18 

First Boston Corp 

320 

10 

768 

11 

Banque Nat 
de Paris 

194 

11 

458 

19 

Dillon Read 

185 

72 

270 

28 

Hambros 

154 

13 

301 

25 

Deutsche Bank 

150 

14 

1462 

4 

Pansbas 

130 

15 

1224 

6 

Algemene Bank 

130 

15 

282 

27 

Drexel, Harriman 

708 

77 

314 

24 

Hill Samuel 

108 

18 

185 

34 

Banca Naz. 
del Lavoro 

95 

19 

642 

14 

Amro Bunk 

85 

21 

700 

12 

Lazard Frferes 

75 

22 

830 

10 

Credit Lyonnais 

70 

24 

634 

15 

Credit Suisse 

60 

25 

550 

17 

Soc Gen. 
de Banque 

10 

31 

428 

20 

Union Bank Switz. 


617 

16 

Source ‘ Smnh, Barney 

illiquid and unsatisfactory. 

Moreover 


the continued existence of both mar- 
kets on their present scale in Europe 
remains in doubt, American coininercia! 
banks have been the Eurodollar mar- 
ket’s mainstay. American investment 
banks have dominated the Eurobond 
market, as the extract from a league 
tal)le of public i.s.sues drawn up bv 
Sirnth, Barney in Paris .shows. (A 
number of other Aineiican houses 
anrl Am(‘riean-domi]iaied groups m 
London who are more active in private 
Eurobond placiugs are not included in 
the table.) d’bese .Americati houses are 
growing increasingly restive at the 
losses tiiey incur when demand for 
Eurodollars by their parent banks in 
America di eliiies, and when the F^uro- 
bond market suffers — as it did in the 
weeks after August tliis year. If Wash- 
ington relaxes resiricfions on domestic 
borrowing and foreign investment, a.s 
it means to, there will be little reason 
wliv the American end of the Euro- 
dollar and Eurobond markets should 
not return to N(?w Y'ork anyway. As it 
haj>peiis, interest rate differentials and 
half-cock restrictions will doubtless 
persuade most Americans to stay, but 
nnt for any God-sent advantage that 
London enjoys in w'hat is above all a 
telephone market. 

‘0 Different market rules. British 
financial institutions have long found 
it hard to sustain an interest in Europe’s 
stock or money markets because 
Europe’s accountancy and disclosure 
rule.s, other than in Holland, are 
archaic. Company directors in Europe 





SURVEY 



ICL welcomes Britain to Europe. 


When Britain entfMs the EEC 
in ] 973 she will find ICL there 
already. For in the face of strong 
competition ICL has established 
a firm foothold in France, West 
Germany, Belgium and the 
Netherlands, Besides in all the 
other applicant nations; Eire, 
Norway and Denmark. 


Our European offices owe 
much ol tlieii success to an 
asset thal lew other international 
computer companies can claim. 
iCL's staff are all Europeans and 
indeed mainly locally recruited. 
That means that we can offer 
European minds for the solution 
of European problems. 


In an enlarged community 
we expect to do even better, for 
then our size and strength will 
tell. Even now ICL is the 
European leader by the only 
standards that matter: it is the 
largest European total systems 
supplier. 


ICLl International Computers 

I Europe’s world-wide computer company 




34 SmtVBY 


tin waowOttn jKM^ 


*Thereare 
one or two points 

hn not dear on.» 


There’s been both too much and too 
little talk about the E.E.C., and there are still 
quite a number of people who haven’t yet got 
down to the detail that’s going to concern 
them personally. But quite a number of other 
people have gone a good ’way along the road 
to Europe, very often talking some of the 
problems over with Barclays. 

For we in Barclays know the 
E.E.C. pretty well. We’ve been handling our 
customers’ European business ever since 
Barclays started in business. We’ve a wide 
circle of banking friends in the Common 
Market; and we have our own branches and 
representatives there— in France and Germany, 
Italy and Benelux. 

So if you still have queries outstanding 
about your business and the Market it could 
be sensible to try them on us. 


THE BARCLAYS GROUP 


The BarcLys Group includes : 

Bardavs Bank Limited 

Barclays Bank International Limited 

Barclays Bank (London and International) Limited 

Bardays Bank S.A. 

Society Bancaire Barclays (Suisse) S, A. 

Barclays Bank of New York 
Barclays Bank of (California 

Bardays (Overseas Dcvclopmem (corporation limited 
Bardays Export and Finance Coinpany l-imitcd 

JL 


Barclays Bank Trust (’.ompany Limited 
Barclays Unicorn Limited 
Barclays Insurance Services Company Limited 
Associated Companies : 

Bank of Scotland 

United Dominions Trust Limited 

Banque de Bruxelles S.A. 

Banco del Oesarrollo Hconomico l^^spahol 
StKide Financi^rc Europcenne 
Baric (> imputing Services Limited 


The Queen’s Award to Industry 1971 
to Barclays Bank Limited 



THE EGOltoMlST JANUARY I, I972 


BEG 


SURVEY 35 



In London, two Americans, Connally and Burns, brood 


take little notice of shareholders. Many 
shareholders’ names are not even known 
in Europe since shares are held for the 
most part anonymously tlrough 
bearer shares, for tax and other reasons. 
The njarket.s in European securities are 
chronically narrow. 

4) No forced takeovers. When BSN 
tried to take over Saint Gobain in 
France the Raris financial club shud- 
dered in a way that is stilil not forgotten 
years later. The Bastogi affair in Italy 
has lately reinforced distaste for this 
Anglo-Saxon way of doing things. 
Banks and shareholders in Europe are 
conservative c/eatures. Tliey resist 
raiders. In France and Belgium, more- 
over, they are backed up by govern- 
ment agencies in the French ministr>' 
of finance and in the Belgian banking 
commission who quite .simfxly .stop 


sharji financial practice by fiat. Little 
is written or adjudicated. It is enough 
in Paris for M. Gisoard d'Estaing or 
one of the handful of his top assistants 
at the ministry of finance to say 
privately what is a well-known signal : 
“ I wouldn’t if I were you, ’ 

In CJermany the club of big banking 
shareholders resembles in its authority 
the steelmen of the Dusquesne club in 
Pittsburgh who closed ranks in 1969 
to wreck the ambitions of an outsider, 
Mr Jame.s Ling, when he tried to buy 
Jones & Laughlin. It will be a long 
time before a contested takeover in 
Germany could be won over the oppo- 
sition of the Dresdner or Deutsche 
banks — unless it were made in the first 
place by an aggressive insider like 
Westdeutsche Landesbank (also in- 
volved in the Bastogi alfaii). 


Bank versus equity 
finance 

What these last difficulties add up to k 
an historic difference between the way 
Europe and Britain finance themselves. 
Britain, like America, has believed in 
the ideal of publicly quoted equity 
finance. The continentals, by contrast, 
borrow from and, in the German case, 
are largely controlled by, their bankers 
or consortia of banks. In France, share- 
holding by private citizens is widespread 
but disillusioning. The attempt to get 
open-ended mutual funds (Sicavs) going 
has been a flop The equity market 
refuses to respond to treatment. This 
is largely because the big state banks 
in France (like the nuxed banks in 
(iermany), plus the state itself, siphon 
off huge parts of the available money 
before it ever gets into a publicly 
quoted market. This accounts for the 
paradox that while the London money . 
and stock markets are so much bigger 
than any others, the fre.sh capital raised 
each year for private industry in both 
France and Germany easily exceeds 

the amounts raised in l^ondon. 

'Fhe British method of doing things 
is not necessarily going to spread to ; 
Europe. British industrial companies . 
and the British capital market arc ! 
equity- and profit-oriented beings. |, 
They are free of the nexus of banking 
and stale control in Germany and 
Europe's Latin countries. But they do >, 
not have any more obvious sucx^.ess in i 
creating a surging free-enterprise 

economy tfjan their European opposite ' 
numbers. “ Capitalism is very young ^ 
here,'* .says a Munich banker gazing ; 
happily over his booming city, “ and 
it will not surjDrise me if it dies i 

l)efore it is much older.” French 

bankers say the pursuit of efficiency . 
by threatening takeovers is a myth. 


The goose that lays the golden egg 

Net invisible earnings of the City of London 
500 



1965 1966 1967 1968 1969 1970 

Book 


Insutcince 


Bnnkinq 

Comniodily rnarkois, 
export houses etc 

Investment trusts 
Baltic 8* 

stock exchanyes 


London's towering equity market 


CAPITALISATION end 1970 TURNOVER. 1970 lest for EEC) 

0 fbn 10 20 30 0 fbti 5 10 

1 1 1 1 I 1 1 


-London- 


^ Germ., ^ 



-Hollciiid 

ltdiv ^ 

Bftiqiiim 1 


Sntirre prv'i.ps Hi 


Number of domestic companies quoted and traded 

MILAN AMSTERDAM BRUSSELS FRANKrURT RARIS LONDON 
13S 400 400 400 830 3307 


3® Sl/RVEY 

“ Mer^^t'rs are wliere one partners eats 
another/' says a Frcuciian-iniiiclecJ 
Frencli busifiessinaii, IntJeetl I'ajro- 
peans (|uestif)n the wisdom of the 
British sliareholder wlio often seems, 
on tfie >ay-so of (Ji rectors who liave 
small slakes in the coiiif^anies the\ 
run, to sell out as soon as lie is 
ofl'ered a faney price. “If youi British 
as.sel-strip|)ers think wc mulervalue our 
assets,’' says a memhcr of the Paris 
^branrli of the Rollischild family, “ they 
are in for a shock.” 

Tht^ British merc hant liankimj; fralcn- 
nity will doiihtlc^ss ferret out eiilei pi isinj^ 
husinessnum on the* contiiH'iit who scn- 
the availability of hiiaiue oi mer^cis 
throui^h London a> an c'scape mute 
■ from the elutehcv' of the hanking eluhs 
who dominate them at home. .\n adored 
merger or rc‘\’erse taket>v(‘i ol a Bntislj 
publicity (juoled r(ui.|)aiiy can at 
one stroke' emaihipate a I'.uiupc'an 
businessman In giving him a share' firiee 
which he tan us(‘. At the samt' time it 
is also llie case that Biitaii/s new hank- 
ing lules will ('NComaee llu* British 
ci<*armg hanks into je ’ the sort of 
indusirial I'ontiol In' c(^';im<'i'(’ial hanks 
which has hec'n llu' patlc'in in ranope. 
Tlie long-term fii(uu'of cntrcpiencui lal 
equity markets as we know ihc'm miisl 
he in douh!. Indi'i'd, this and tlu' grow- 
ing r('(|uiremeiU feu .:ake-ca[)ilal among 
operators in tlie iMuohond and forward 
foreign eNchangi' markets, heir the 
question of how many merchant 
hanks can i'\pei’i to suiAave as mde- 
pendenl entities over llu* ne\l ten year.^. 

What is on London's side is lliai, 
either wav, the lliine to he* in a cajrital 
intc‘i]si\'e age is a hankc'r. Oncc' the 
present slump is over, and high interest 
rates and capital ^carcit^ r’(‘ti!rn, as 
each snreiN' will, London should he in 
its ('Irmc'iit. 1 he l''rcnc!i M\th iilan alone 
envisages a 7-it jici cent annual growth 
in productive iiiveslmenl. In this sort 
of atmosphc'i-c, I a union's go-getters 
should, if ihev are cautious, he AAv to 
prise Kurope's capital market eluhs 
open a little hit. More decK've will 
be the twin (jurstions ol whether tlu' 
mainline mcuTluml hanks can make 
themselves liig or ingenious enougii to 
survive, and wlietiier Britain's elejjlum- 
tine hut parochial commercial haiikcis 
wdll be sufficiently reju\enaled by the 
new hanking law's to pho tin .scut of 
game which all Kmope misgnnledlv 
.seems to (‘xpect of them. Thc\ mav 
well end up marrving eacli c.ther-, oi 
getting together in more hartking clubs. 

Lastly, London will depend on the 
character of monetary union in Km ope 
after Britain joins. Inflex'ihle monetary 
tules applied to all Eui’n})e from Brus- 


££C 

sels would kill the ingenuity 0/ Lon- 
don's hanking practice in any offshore 
money market like Kurodcdlars. By 
c'ontrasl an mtelligenl regime which 
frees monetary flow.s inside Europe 
would make London's money and stcK'.k 
market so atlracinc' to investors tlrat 


THE EOONOMI.^T JANUARY t, 197*^ 

Europe’s bankers would wish to use it. 
It is a striking thought that a market- 
place such as London, linking Europe’s 
huge; regional banking systems, might 
do more to rationalise European 
cornnicrce across frontiers than any- 
tiring else. 


Le langage francoys 


Morc^ people now spc:ik English 
ill Euro]>c than French. ' The ga]) is 
wilier still bc'iwcen the number of 
people spi'aking ihi' two languages in the 
world at large. It is ihcrefon^ to 

be an uphill battle for the ITeneh to 
kfcp ih(‘irs as the pre-eminent ofliiial 
language in.sidi* the EEL, marking 
I'aii’ope by its languagi* from the ri\i»t of 
the world. 

French has some things going for it. 
It IS ohl, l.aiin and sidf-i onscious. A 
iDiieiU ol tieatises in the siMeeiilh cen- 
tury (In Bellay, Roiisaid himself, lleiiri 
Esticnue’s nias'flive Dr la PrrrclUnue du 
ian^a^r lrari{oy\ rti. irked out a lour'^i' 
tni French which it follcnvs still. 
I'l’cnchnieii still talk wistfully of the 
uiaintcnance of French culture in the 
francophone countries of the world, 
from Qiiebci to black west Africa. 

Because French has allowed itself to 
become a stiff and styliised medium, it 
IS in a cynical way more useful than 
Fiigli.sh as a vehicle for diplomatic 
bargaining. Frcni h words carry .several 
meanings, whereas laigli.sh has spawned 
many ’.xords with e.\aci rncaitings. In a 
m guiialion F'l c’lii h thus proves very 
liandy. Agreement can often be reached 
on a French text which would never 
wash in laigli.sh — vi/ the deal on Com- 
mon wealth .sugar ill the Britisli entry 
negoiialions last year. Quite different 
interpretail ions can be put by different 
]iroj)Ie on the s^mie Fn-nch text, making 

Who speaks what 

Adults who claini to speak - 
f^nc|libh French [TH] 

0 10 70 


r 


30 % 40 


r luiiiii K.' 

cm 

ZD 

< iilldll'. 

'"'hnr 


Ciriiiuiii 






fint.iiii 


[m 

franf'c 




Hfl 


PL, 


compromise po.ssible ; this is harder in 
English. 

Where French ks on the defensive is 
in the commercial world. Its stilted 
academism — ^which Ronsard wouhl have 
dtplored — gives n no i hancc against the 
on.slaught of Englaiid's American 
dialect. Indeed the saddest aspect of 
what the eornmori market and multi- 
national i.srn is doing to homogeni.se 
Europe eaii be illustrated by the 
example of a Belgian Walloon (French 
speaking) rrl'ishing thi' day that every- 
one in Eim>pe speaks English as their 
first language : ‘ .so much more 
(‘Ificient.” Fhe notion that a heritage 
iMi rich as Frencli, or Gennan, { ' Ttalian, 
should be sacrificed for the sake of 
making a few extra mill'ion [da.slic tea- 
cups a cent cheaper each, ts depressing. 

In Brussels, English will join thi' 
inhers as an equal oflieial language. But 
it is informally agreed that French will 
be the “ working " language. All Briti.sli 
civil .servants going to Brussels must 
ha\'e a working knowledge of Freru h, 
according to the Britisli (iovemmem — 
though to hear si>rne of us speak French 
niaki's one wi.sh that Englis'h would pre- 
vail, after all, just to savi' Freneh from 
the hurniliarion it suffer.s when mangled 
by Englishmen. Fiither w'ay, laiglish 
already seems to be taking over the 
Brus.sd.s eorridois— sorry, / nw/u/n with 
French retreating into the council 
chamber like Latin in the Vatican, 


Western 

Europe 



Couve is a francophona 






The EEC 

dawned on 
14 years a 










P^(l«W*»-if 


«>*■ 




As Biitisfi industry fuces tfie problems and 
opf)ortunities of the Common Market, we arc 
happy to tell the world that we have been 
facing the problems and seizing the 
opf)ortunities ever since tlie 'Treaty of Rome 
was signed. 

As an Anglo- DutcTi business, we are already 
established in all tfie Common Market 
countries. The long-term benefits of British 
entry are being taken into account m oui 
future plans and investment proposals. 

We expect British entry to have a favourable 
effect on the t^conomic rate of (growth in 
Western Eurot.)e as a whole, More growth 
means more investment. 

From both sides of tfie Channel Unilever 
welcomes Britisfi entry. 








▼4 


Theinnovati 

fromthewoildsl 

maniifactiiri 

A furnace! 


This perfects a new 
system to process special 
steel Here’s how it all 
began 

We re famed for 
our durable acid-steel 
which can only be made 
from a scarce high-purity 
ore (We re lucky-we still 
get this from our own 
Swedish mines ) 

But we wanted a basic steel 
that would compare with this-at 
reasonable cost 

So first we split melting and refining into separate 
furnaces, invented a new method to refine with, and 
lifted the grades of basic steel higher than ever before 
possible without extra processes 

Already, after only six years, some 20 steelworks 
worid-wide use this method 

The new step-a melting machine! 

Now we’ve taken the second step, aiming at high 
production economy We invented a two-body furnace, 
TwinShell, which almost machine-like boosts output of 
melt by 40 per cent 



ion ofdie year 
biggest beaiii^ 

er: 


Interchanging covers swing over its two furnace- 
shells to preheat in one as the other melts— then swing 
back to reverse the sequence-evenly producing melt 
for our special refining furnace. 

The two techniques make up our unique MR System 
—melting and refining. 

What’s a bearing manufacturer doing developing new 
steel processes? 

As makers of the world’s finest range of rolling bear- 
ings, we need the best possible material to use in them. 
And bearing quality depends as much on its steel as on 
its final precision. 

That’s why we started making steel more than a half- 
century ago-and why we’re still developing new 
processes. 

Today we produce high-grade steel for much more 
than bearings. And for many more than SKF-even for 
competitors. 

As for furnaces, we don’t make them. We just invent 
them! 



ANKSOCMBTRY 

AVOVAGE OF DISCOVERY FOR MANKIND rubbir. plastics. nBms.RimuzEiii. 



THE ECONdkilSt JANtJAftY 1, ^973 


EEC 


SURVEY 4r 


We, or they, are out of step 


The EEC’s usefulness to the United 
States of America, its chief pa-tron, has 
remained tantalisingiy in the future. 
Washington has traditionally egged 
Europe on to greater things for three 
reasons : to bring a political cohesion 
into western European affairs which 
would provide America with a strong 
western ally in its confrontation with 
the Russian-dominated block of com- 
munist states ; to increase the possi- 
bility, therefore, that America’s direct 
military burden in Europe could 
eventually be taken up or supple- 
mented by the Europeans ; and to 
provide, third, a growing market for 
the products and investment of 
America’s innovative and capitalist 
way of life. In all, Europe was to be 
America’s eastern bastion against com- 
munist Russia and its satellites, and 
America’s exitra market and capitalist 
shop-window to boot. 

Had America had the toughness to 
be beastly earlier to the Europeans, 
and also taken the risk of trusting diem 
more — say with the command erf Nato 
— it might by now have got more out 
of Europe in return. As it is, the politi- 
cal togetherness which the Americans 
wanted is not Europe’s liallmark. 
Afxirt from various determined noises 
lately, notably from Mr Heath and 
President Pompidou, there is little siign 
of a credible European strategic 
nuclear force in Europe (or, even if 
there were, of whether the United 
States would feel comfortable about it). 
Electoral survival makes it harder now 
r 


than even five years ago > for any 
European politician to advocate spend- 
ing more of national income on 
defence. In almost every public 
American document on foreign affairs, 
“ Europe ” is discussed as a single 
entity, which, plainly, it is not. 

Europe’s inability to fill out 
America’s political design is matched, 
in American eyes, liy its ability to make 
a nuisance of itself commercially. In 
the name of future political usefulness 
Europe had been grabbing for itself 
discomforting economic strength. For 
years now America’s lobbies have 
attacked the mixture of farming pro- 
tection and industrial tariff-free trade 
wihioli Europe has designed for itself. 
In addition, privileged access to both 
of these is available to a number of 
America’s faster growing small markets 
in Africa and the Mediterranean and 
will soon be extended to the entire 
undeveloped section of the British 
Comrnonwtralth. I’hc cxmntries with 
w'hioh the enlarged common market 
will probably have preferential trade 
links, of one sort or another, are illu- 
.strated by the map on page 27. In the 
commercial aspects of its existence, 
Europe has, in riianv American eyes, 
made itself a cuckoo in the Atlantic 
nest. 

The resulting dispuites, brought to a 
head since August, contain distortions 
of detail on both sides. Some of thc.se 
distortions come from a deliberate 
desire to deceive in what was until 
recently a war mostly of words. Other 


distortions flouri.sJi in a fertile bed of 
ignorance on both sides. Yet others — 
sucfi as the illogical claim by America 
that Europe's neutral countries should 
for some reason he excluded from free- 
trade arrangements with tlieir west 
European Nalo neighbours — are akin 
to what Mr Christopher Soames, in 
his cables from Paris during the more 
awkward pha.ses of British entry nego- 
tiations, used to de.scrihe as the 
“ Riussian tjxctic ” then being used by 
France. 1 'he Russian lactic means 
filling your hand just before a negotia- 
tion wirti cards which you know to be 
of dubious value in themselves, but 
which may usefully l>e tlirown away 
during the game in return for conces- 
sions from the other side. 

Dialogue of the untaught 

A few instances of this dialogue of the 
deaf, or, worse, of the untaught, will 
he enough to show how petty it can 
become. It forms a list of special 
j)leiiding by antagonists wlio ougiit to 
be allies. 

# It is said by the Six tivat their 
common average {)o.st-Kennedy round 
tariff against imports of industrial 
goods is lower than America’s ; 
further, that virtually none of the Six’.s 
tariffs will exceed 20 per cent next 
year, when^as rj.fi fier cent of 
America’s tariffs are over 20 per cent. 
(IVue — so far as it goes.) 

Here is wliat the Americans say in 
reply : Europe’s tariff against finished 
goods is higher than America’s. (Also 
true but only just.) Anyway, Euroj^e’s 
individual members operate a panoply 
of quotais and restrictions Which in 
many cases makes these common tariff 
rates barely relevant. (I’rue.) 

# Point two, according to the Six. 
America has no cause to complain that 
fann proU*otion in Europe has kept 
American food out of its largest exiter- 
nal market. The Six take a slightly 
higher proportion— over a fifth — than 
before of total American farm exports, 
which have, an\'way, grown in money 
tenns, to $2 billion in 1970, during the 
years that the Six’s protectionist com- 
mon farm policy has been in force. 
(True as far as it goes.) Be.sides, 
America suKsidises its fewer fanners 
more heavily, tliough in a different 
wav, than Europe does. (Very true.) 

Yes, say the Americans. But Ameri- 
can food exports to Europe have barely 
increased at all in real tenns. Europe, 
a rich men’s club, 'lias encouraged the 
habit of protection in fann products 
elsewhere in the world, so no wonder 
it has kept its share of American ex- 



The Atianth eliiance comes heck to earth, not the same as it warn up 



42 SURVEY 


ERG 


THE ECONOMIST JANC^ARY I, I 97 R 


ports. Particular American products, 
such as soft grain and chickens, have 
taken a hammering inside the overall 
balance of farm trade ; only the large 
increase in exports of American soya 
and other fe^stuffs, “ temporarily ” 
exempted from the CAP when it 
start^, has made America’s export 
figures look even as tolerably good as 
they are. (Irrefutable.) 

# Point three. What is America belly- 
aching about anyway ? It lias an 
overall trade surplus with all the com- 
mon market countries. It is Japan 

, w'hose huge trade surplus with 
America, combined with America’s ex- 
ports of capital to here, there and 
everywhere, w'hich causes trouble. 

What a nonsensically mercaTitilist 
thing to say, answer tlie Americans. 
Really, you Europeiins have not got 
much l>eyond Colbert 300 years a^. 
Besides, America’s trade surjilus with 
Europe fell drastically in 1971. 

# Point four. America lias “ strate- 
gic industries which Europeans are 
not allowed to invest in directly in the 
United States. It keeps tangling 
Europe’s big corporations up by arbi- 
trary use of its an'ti-<trust laws. Mean- 
while, Washington floods the world 
with dollars which it prints for the 
purpose and then borrows them back 
to buy up European industry. Ameri- 
can direct investment (book value only) 
in the Six was $12 billion by 197!, 
with another $8 billion in Britain. 
The Six’s and Britain’s direct invest- 
ment in America is only $8 billion. 
Through their own manufacturing 
d^tablishnients set up in Europe 
American companies make and sell 
four times the value of American 
manufacturing exports to Eurojie. 
Moreover, they dominate Europe's 
most advanced Industries. (True for 
computers, untnie for petro-chemicals.) 

To which the American answer is 
that Europe has benefited from the 
vast flow of technology and manage^ 
ment techniques that American com- 
panies have exported to Europe. Be- 
sides, European investment in America 
is, by some measures, as high as 
America’s in Europe — it just .so hap- 
pens Europe invests indirectly through 
Wall Street whereas the Americans 
choose to buy or build European busi- 
nesses direct. 

# Point five is the issue oii which 
both sides have good arguments to 
make and so get most shrill. It con- 
cerns Japan, The Europeans accuse 
America of now forcing the Japanese 
out of Japan’s most natural export 
market by a combination of mandatory 



’HCk SQDiMtoST JAMUARy f, 1078 SUKVE^ 4^ 



‘The Renault 12 is probably the most comfortable car ki its das^ 

AUU^AR RrNAULl J TL 1 98 


What do th^ mean,‘probabl/? 


Let’s not beat about the bush. 

The Renault 12 is the most comfort- 
able car in its class. 

No ifs, buts, or probablies. 

Our claim is not without substantial 
substantiation. 

The car is bigger than most 1300’s 
for one. 

14' 3" (4.34m) from rubber ovemder 
to rubber overrider. 

And because it’s front-wheel drive, 
there’s no transmission tunnel. 

So you can stretch your legs without 
having to get out of the car. 

Getting out of the car, incidentally, 
is as easy for those in the back as it is for 
those in the front. 

Because it has two back doors as 
well as two front doors. 

It’d be even easier if it weren’t for 
the seats. 

They’re so comfortable, that once 
you’ve sat in them, you’re just a little 
reluctant to get up again. 

The two front seats are fully-reclin- 
ing, and mounted on sloping runners. 


(The further forward the seat is, the 
higher it is. And vice versa.) 

The back seat will accommodate 
three adults. Side by side, as against one 
on top of the other. 

That’s not all. 

The Renault 12 is as nice to ride in 
as it IS to sit in. 

Flat out, it’ll do 90 mph (147 kph). 
Effortlessly, it’ll do 70 (113 kph). 

It’ll do it quietly as well. Because 
everything that needs soundproofing is 
soundproofed. Even the wheel arches. 

Now, in case you’re beginning to get 
restless in your armchair, we’ll tell you 
what > ou really want to know. 

The outrageously opulent Renault 
12TL is very reasonably priced, com- 
pared with common-or-garden 1300s. 



Pot further details about the Renault 12 wnte to 
Regie Renault BP1Q3, 9? Billancourt, Prance 
RenaultLtd. Western Avenue, London, W3 UK. 




IjK 

\ 


n 




We buv from, sell to. compete with and 
mamifauwe for many of the world’s giants in 
the chemical industry. Entry into Europe, with 
the tariff wall down, can only improve this 

situation, since even now, the EEC countries 
constitute our biggest market. 

Wc are building plant, increasing 
staff and strengthening our European 
links in readiness for an 
expanding market. , \ 

A Hickson Group 




Company 


MCKSON&WEUmUD 

Castlefoid Yorkshire WFIO 2J f 
Telex 55378, Telephone 097-75 6565 


ihf* 

1 . LriL.J 


J 



SURVEY 45 


THE BCONCHifiST JANUARY l\ I972 


BEG 


and “ voluntary ” quotas plus forced 
revaluation of yen. This means the 
Japanese will now swamp the Six plus 
Britain, to which together 'they 
annually send only 9.2 per cent of their 
exports, compared with 31 per cent of 
Japan’s exports bought by America. 
Europe, by contrast, lias reduced the 
number of Japanese goods on which it 
imposes quantitative import restric- 
tions. 

The American answer is plain. 
America still puts quantitative restric- 
tions on fewer items from Japan than 
Europe does. It is largely because 
Europe so long kept limits on over 70 
such Japanese categories that the 
wretched American producers had to 
bear the brunt of an import invasion 
by the yellow peril, so setting off the 
whole grisly cycle of protectionism. 
Look, say the Americans, at how the 
Six are now dragging their feet on a 
new more liberal trade agreement with 
Japan — a go-slow whicJi Britain is 
likclv to su[jport tacitly. 


Atlantic Pirandello 

A Pirandeliian quality infuses this 
debate. Reality in the OFX^D and In 
(ratt, as in the worst human families 
studied by Dr Laing, is genuinely what 
each side sees it as. If right were more 
exclusively on one side the rift would 
not have taken place. 

The Atlantic argument, then, is a 
messy and extended one. It does not 
recognise, as we noted on pages 27-28, 
that big rich places like Japan-Asia, 
Europe and America can nowadays 
beg, borrow or steal each other's inven- 
tions and management techniques. 
Therefore it ignores the nionetaiy' con- 
sequence chat if countries will not 
(a) permanently ease up the rigidity of 
their foreign exchange parities and 
agree upon rules for reserve currency 
countries they will therefore 
either (b) have to go in for market- 
sharing arrangements such as all the 
world operates in agriculture, and such 
as Japan and America find themselves 
creating on textiles and steel, 
or (c) be ready to accept regular and 
disruptive bust-ups such as have 
afflicted the free world countries during 
the past two years. The Wa.shington 
dollar deal will not last like its pre- 
decessor foi a quarter-century. 

More important, the tetchy Euro- 
peans have for too long refused to 
acknowledge that their wealth is limked 
to their defence and security, the 
cj^dible bit of which the Americans, 
not they, have been paying for. 



When Schiiler tetts jokes, it's not always so funny this side of the Atfantic 


46 SURVEY 


EEC 


TKS ECONOMIST JANUARY I, tffja 



You can open your eyes Ted, they're still there 


If they go 

“ If half a dozen of them put their 
heads together it would not need a 
a genius to put this thing back in 
shape.’* The speaker is a distincly 
European American who remembers 
November, 1959, when simply by 
“ putting their heads together ” in 
Paris four of “ them” — Eisenhower, 
Adenauer, de (xaulle and Macmillan 
—first set up a new organisation, the 
OECD, to sort a similar set of econo- 
mic problems out, and theji moved 
more or less willingly into a discussion 
of Atlantic defence. But that was more 
than 12 years ago, the community was 
young, the frictions of its existence 
slight. More important, the United 
States was then the undisputed leader 
of the Atlantic alliance. Ameika’s 
wishes went. 

Even when President Kennedy and 
Mr Robert McNamara were later get- 
ting a worried set of allies used to the 
notion of flexible nude;* ' response and 
to the idea of Amenta enjoying a 
declining nuclear superiority over 
Russia, it was (‘nough for them to 
arrange matters by a serie.s of bilateral 
discussions witli Euroi^e’s individual 
heads of state. Unlike the rush of 
Atlantic meetings last month, those 
conversations 12 years ago took little 
account of each other ; indeed a later 
one, that between Kennedy and Mac- 
millan in Nassau in 19(13, efTectively 
sank any remaining hope that the 
British prime minister had of persuad- 
ing de Gaulle to let Britain into the 
common market. 

The anxiety in Washington today is 
that Europe will do too little to help 
American jiresidents convince their 


voters that the wealthy men of the 
common market any longer deseive 
help. On the European side, the worry 
is simply diat America, at least in part, 
is going to go away. The arithmetic of 
an Amer'ican volunteer army may 
automatkally compel a reduction of 
the aliout 300,000 American service- 
men (;f all descriptions kept in Europe. 
(Some 215,000 of these are men on the 
ground in (iermanv.) Doubt exists in 
Europe not only over wxiether, as one 
student of the alliance puts it, 
“Washington’s intellect is any longer 
in charge.” Wor.se still, is that diis or 
a future American adininis'tration may 
deride — whether it is exposed to the 
pressures of a know-nothing election 


campaign or not — ^that the security of 
Ekirope is no longer as important for 
American security as it was. 

Atlantic defence rests on America’s 
nuclear guarantee*. Eairope’s nuclear 
nations, EVance and Britain, cannot at 
|)resent (if ever) replace*, only supple- 
ment, what America provides. America 
is now engaged with Russia in an 
attem[)t to reduce the* scale of their 
nuclear race. The acronym of these 
talks, Salt, unintentionally conveys 
some of the sce^pticisni which so often 
hangs around them. And they illustrate 
F.urope’s dilemma vividly. The stra- 
tegic arms limitation talks concern 
liurope almost as much as they do the 
United States, yet Europe plays no 
direct part in them. Mr Heath, for 
one, during the phase of impatience 
witli the United Statc.s which he went 
through last year, wa.s lieard question- 
ing whether such bilateral talks with 
the Russians should ever have been per- 
mitted (in Vie?ma and Helsinki) on 
European soil. It is hard to see how 
EiUrope, and the two Germanies in 
particular, can be freed of the fear 
that they may one day be a nuclear 
battleground. “ One can imagine some 
awful day wlien west Europe would be 
annihilated from Moscow, and central 
Europe from Washington,** said de 
Gaulle. 

In .such a peace made by fear, west 
Germany has the worst of all parts to 
play. None o-f its victors in the last 
war will allow it a nuclear capacity 
of its own. And Germany itsell h-as 
now grown not to want one. It depends 



When they put their heeds together 



THE ECONOMIST JANUARY I, 1 972 


SURVEY 47 



Companies of the Burmah Group are already going strong 
in the EEC countries— and in the rest of Europe. 

Our manufacturing and marketing involvements in the fuels, 
lubricants, chemical additives, engineering, building product 
and allied industries bear impressive witness to our faith in the 
future economic expansion and p.osperity of Europe. 


Austria: Castrol Austria G.m b.H. 
Belgium: Burmah Trading S.A. N.V. . 
Rawiplug Belgium S.A. N V.. Edwin 
Cooper S.A. N.V. ; Rxpandite S A. N.V. 
Denmark: Castrol A/S, Yhanco A/S, 
Pawiplug A/S 

France: Socie^tti Anonyme dcs Huilos 
Ccistto! . Soc:i(!t(j: Sciiralitc . FIcxibox S A. . 
Pawl S.A, 

Germany: Deutsche Castrol G.m.b.fl,, 
Edwin Cooper B Co. G.m. b.H. . 
Westeuropaische Handels- Kompagnie 
G.m. b.H.. riexibox G.m. b.H.; Borg 
G.m. b.H. 

Holland: Burmah-Castrol Nederland 
N.V. : Atlos-Triton Chemie N.V. : 
Nederlandse Rawiplug N.V. . Sealanco 
N.V. ; Flexibox N.V. 

Ireland: Burmah-Castrol (Ireland) ltd.; 
Fxpandito (Ireland) Ltd. The Rawiplug 
Co. of Ireland Ltd. 

Italy: Castro! Italiana S.p.A. ; Flexibox 
S.p.A. ; Rawiplug Italiana s.r.l. 


Norway: Castrol Norge A/S, Expandite 
Norge A/S. 

Portugal: Castrol Portuguosa Ltda. 
Spain: Flexibox de Espaha S.A.. 
Expandite Asociada Iborica S.A. 

Sweden : Flexibox A/B . Castrol A/B ; 
A/B Svonska Uno-X. Svonska Rawiplug 
Co. A/B. 

Switzerland: Castrol (Switzerland) 

A.G . Atlas McAlpine Div. of Castiol 
(Switzerland) Ltd. 

United Kingdom: The Burmah Oil Co. 

I Id.; Burmah Oil Trading Ltd. ; Burmah- 
Castrol Co. Ltd.; Burmah Industrial 
Products Ltd. ; The Rawiplug Co Ltd. ; 
Expandite Ltd. ; Campbell Technical 
Waxes Ltd. . Dussek Brothers I td.; Atlas 
Preservative Co. Ltd. , Burmah 
Engineering Co Ltd.; Dynaflex Ltd.; 
Flexibox Ltd. . Potrocarbon Developments 
Ltd., Burmah-Castrol Europe Ltd.; 
Burmah Oil (North Sea) Ltd.; Halfords 
Lid. ; Edwin Cooper B Co. Ltd. . 

Major & Co. Lid.; Solignum Ltd, 



Burmah 


The Burmah Oil Company Limited 
Burmah House, Chiswell Street, 
London. EC1 Y 4SX. 



48 SlIRVKV 


THE ECONOMIST JANUARY I, 



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SURVEY 49 



Britain as crosspiece 


THE ECONOMIST JANOARV I, I972 



Playtime in Prague, march-time in Frankfurt 


instead on the fear that America’s 
nuclear capacity can induce in the 
other side. In Germany’s judgment, 
the best methods of keeping America’s 
nuclear intentions up 'to the niark are 
to be nice to Washington economically, 
and to pay for and plead for American 
soldiers to be kept on German soil. 
Foch used to say that a single Britisih 
soldier abroad was sufficient hostage 
to take Britain into a foreign w'ar. In 
nuclear politics, run from an America 
that often seems to be in social and 
electoral uproar, an abiding German 
and European fear must remain that 
even a hundred thousand Americans 
in unifonn might not be enough ; that 
(as Alejcander Borgia said of Charles 
VIII when he overran Italy) the 
Russians could take Europe with ciialk. 

France and Britain both share some 
of Germany’s fears, but with two 
decisive differences. Theirs is not the 
first turf which would be overmn from 
the ea-st. Second, each of them has a 
nuclear capacity which it could use. 
And tlie way they would use it is a 
gruesome one for Germany to think 
aJbout. They might, with or without 
the Americans, rain tactical nuclear 

warheads on east 01 even west Ger- 
many if this would discourage a 

Russian occupying force from ventur- 
inig farther. France in particular, 

having withdrawn from the restraints 
of Nato Command, plans to hand out 
tactical nuclear weapons to its forces 
in 19/3 with freer than usual instruc- 
tions of when and at whom they may 
be fired. But even France needs 

America, and Britain is its and Europe’s 
nuclear crosspiece to Washington. 


It seems likely that Mr Edward Heath 
will during 1972 — perhaps even by 
the time diis suivey is printed^ — 
advance or give his support to a 
scheme for an exclusively European 
caucus on security and military 
affairs. This will be outside the exist- 
ing Eurof^ean talkshop in Nato from 
the military side of v^iich Fiance has 
excluded itself. However, decisions 
reached by such a new European caucus 
outside Nato, could, without French (or 
Irish) loss of face, be transmitted and 
discussed on its behalf by the European 
group inside Nato and with die United 
States. Such a notion may prove 
unworkable or unacceptable. Its aim 
would be to get France off its anti- 
Nato hook, while involving it integrally 
in specifioally European defence ; and 
to reassure (^rmany that the object is 
not to divorce European defence from 
Nato (in which France retains a 
political voice). 

Among Europe’s main heads of state, 
and inside any new group they set 
up, the agenda could be as follows. 
First, France and Britain have to sort 
out the future of Europe’s own nuclear 
deterrent. So many long treatises see 
the fight of day on this subject that 
one approaches the rather simple 
political realities of the situation with 
a probably unmeri^ted diffidence. They 
are these. France is building a force 
of Polaris-type submarines whose 
strategic nuclear armoury has “tech- 
nical problems “ (particularly widi 


warheads) which Britaiirs partly 
Americiin expertise might very well 
solve. M, Micticl Debre, France’s 
defeiKT liiinister-, has asked Britain in 
the past for lielp, mostly in order to 
eskiblish publicly that Britain feels 
unable to hand 'over what it knows, 
because of the terms of the Nassau 
agreement wltJi America and the 
MacMahon Act. Ne'ithcr Britain nor 
France can calculate what the future 
of its strategic nuclear weapons is 
worth, even as minor deterrents, until 
the extent is known of the deal 
between the Russians and the Ameri- 
cans to limit the anti-ballistic missile 
(ABM) systems which e*ach is now 
building to knock the other’s attacking 
missiles out of the sky. It Rusria builds 
lots more ABMs then the effective life 
of Polaris will be short ; if Russia dis- 
mantles or freezes its ABMs then the 
longevity of Polaris increases. Presi- 
dent Pompidou and Mr Heath thus 
dealt with this problem on the firsit 
day of their May summit last year in 
the most perfunctory manner ; Britain 
and France, for doubtless differing 
motives, agreed in Paris that a trilateral 
meeting would one day be necessary 
between the two of them and 
America. 

In Bonn, Herr Brandt told Mr 
Head) last April that Germany must be 
party to any nuclear agreements 
between France, Britain and America. 
This might make things awkward 
because of the old problem of keq>ing 


rm sonfoifisr jAaOMor i, 1973 


50 SURVEY EEC 


Who CArrleStlwIoad - in money and men,1970 


DEFENCE SPENDING 

$ per head 

Miil — 

11 

' ■ BBBBB 

K 9flBBOI 
BBBQBB - 
DBBBBB 

BBBBBBB 
111 BBBBBBg — 
INv nNHHRHB 

IB.. 


173 


m 

QQIBQ 


- ^ 

$ 

s 


S 


s $ 



. $ 

-$ 

s 

$ 

s 


S .‘f. 

5,. 

MlC3[3[]nE3| 

. $ 

• s! 

'i\ 

li 

E 

? 

.s 

1 


'i, 1 

M tl[3r5fKlJ 
MiLLHni^rr 


. Italy . 


... Belgium . 


REGULAR ARMED FORCES 

per hundred men aged 18-45 

m*M 

tmvM 


.Holland... 


. Germany . 


. Britain 


Prance . 


. United States _ . 


tmtH 

tm M 

ttttM 

tmrH 


Source International Institute for Strategic Studies, Military Balance 1970-71, 1S7V 72 

•Nsthonai budgetary cost to OS of Nato givan officially as $14 of which $3 bn is direct coat for 
European land forces, the rest for heats, support ate. Other astimatas for coat to US of Nato 
(excluding strategic nuclear force) range up to $26 bn. Compare with total 1970 defence spending 
of $26.5 bn by all other Nato countries. (Ali in old, pre^December 20th dollars.) 


: “Germany’s finger off the trigger,” 
i But a good model for solving this 
\ problem exists in the Nato “Mc- 
f Naxnara committee,” or nuclear plan- 
I ning group (NPG), a body in which the 
t nuclear powers tell the non-nucleair 
; ones w^hat they want them to know 
I and on which Germany is content to 
; have a permanent seal. Gennan ex- 
' elusion from a European nuclear force 
f probably worries sophisticated strategic 
thinkers like Bonn’s present defence 
minister, Herr Helmut Schmidt, very 
little. Indeed, some in Germany wish, 
though would never publicly admit it, 
that a Franco-British nuclear force 
would get somewhere quickly, so as to 
free German politicians of the need to 
force tfieir way into an affair they 
prefer to keep outside. What Germany 
requires from any Franco-Bririsli 
nuclear deal is the same say as it gets 
in the NPG, on the targeting of 
weapons and on the circumstances in 
which they would be used — which put 
crudely means “ not on us plea.se unless 
we are already flat on our back and 
perhaps not even then.’* The sticking 
points in reaching such a deal with 
Germany would be what rights of 
veto, if any, it could have over the 
use of Franco- Britisli weapons, and 
whether in the event that Gennan 
troops were fighting “ forward ” inside 
Germany in defence of France, British 
and French in addition to American 
weapons might be “ released ” to them 
for their own use. 


Better men. better 
machines 

Britain should encourage its partners 
to put more shoulder — and money — 
into volunteer recruitment for their 
armies, in place of the wet bundles of 
expensively kitted-out conscripts with 
which they fill out their armies today. 
Conscript armies are like the mercenary 
and hotch-potch forces MachiavcUi 
used so to deplore : “ braggarts among 


friends, cowards among enemies.” 

Next, Britain must press a cause 
that will not be all that easy for it, 
namely a weapons and military air- 
craft programme that slims down the 
grossly duplicated arms industry in 
Britain, France, Germany and Italy, 
while torrowing advice as shamelessly 
as possible from the Americans. What 
will be painful for all concerned is that 
this will mean awarding contracts to 
particular existing manuf^turers, or to 
newly set-up management companies. 
Which in turn will do away with the 
often bungled attempts at parcelling 
out joint defence contracts (particularly 
for aircraft) practised until now — ^a bit 
here, a bit there, the wrong aircraft 
and everyone the loser. When a recent 
“ pro-European ” book called the 
Anglo-German-Italian MRCA aircraft 
a “splendid pioneer project” it con- 
fused the need for European goodwill 
with the needs of an efficienit European 
defence industry. 

Ostpolitik : neutral or 
what? 

In the whole area of strategy and 
security, Britain has a larger psycho- 
logical place than any of Aese indivi- 
dual initiatives by themselves can 
suggest What is ait stake in Europe 
is the extent to which a polyglot 
grouping capitalist countries, bw- 
ing in a peace largely won and 
gusuded for them by a country the 
other side of the Atlanric, actually 
wants to defend vritat it has got 
Already any pqUuiciaii given to qpCM* 



THe EODNOMtST JANViaV 1072 


SURVEY 51 L 


The IntemalicMial 
Herald Tribune goes into 
die C(»nmonMaiket 
everyday. 




52 SURVEY 


mniMiHiiis 

nEUROPE. 

uvann 

i^iowsn 

MEBa 


There’s no paradox lor expanding European companies^ 
looking for a base in Britain. Give or take a few 
temporary twists in monetary policies, future trade 
between the world’s two greatest markets is bound to grow. 

This is wiierc Liverpool comes in as middle-man. 

It’s been traditionally, tlirough its port, a springboard 
for the American market. Multinationals have found 
Merseyside is a convenient location. Unilever, Ford and 
General Motors they are all here along with many others. 

In improving its Atlantic links, Liverpool is catering 
for the demands of the new Europe, Recent projects 
include a huge £40 million dock at Seaforth, with 
a 1 00,000- ton grain terminal, and deep water container 
berths with high speed turn-round. Liverpool’s Airport 
is expanding too, with increased freight services to 
America and Europe:” More industrial and commercial sites 
are being developed both within and without the City. 

In addition to its unique attractions as a deep-sea 
port, new companies choose Liverpool for the usual 
reasons too. A large labour force, room for expansion, 
all the financial bonuses of a development area. And the 
City has other big assets, including the second largest 
consular corps in the United Kingdom, a complete range 
of sophisticated commercial services and the proximity 
of the mass Northern and Midlands markets. 

Clearly enterprising companies within the Common 
Market are not going to confine themselves to the tight 
little triangle which embraces London, Bonn and Paris. 

If your company is looking for room to expand in 
a modern business environment, come and look at 
Liverpool, The City’s Industrial Development Officer 
will arrange a conducted tour of sites and amenities. 

Call : James Goric, Industrial Development Officer, 
Municipal Buildings, Dale Street, Liverpool L69 2DJ. 

Tel : 051-227 391 1 Ext. 602 



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Ostpolitik 

ing more on defence risks his electoral 
skin. Long before another quarter 
century" of peace has passed — if it does 
— sentiment in Europe will doubtless 
have softened to the point that only 
the tightest little professional European 
armies will exist — ^unless, of course, the 
politicians and soldiers in the Kremlin 
turn out to be foolish or factious 
enough to rouse up a west Euro[3cau 
military instinct which peacetime 
affluence is visibly putting to sleep. 
Polls in France and Germany now 
regularly show that a sort of a military 
inertia is overtaking Europe’s people. 
In these circumstances it is hardly 
surprising that German politicians still 
look across the Atlantic for help, 
while insuring against not getting 
it by trying to get back on terms with 
Germany’s communist neighbours in 
the east. 

Judgaiem of Herr Brandt’s Ostpoli- 
tik depends on whether it succeeds or 
fails. This is a truism for any policy, 
but it is the only test worth making 
in the case of Ostpolitik since it 
represents a course of action wiiich, 
once started, there is little going back 
on until the issue is decided. So long 
as it hangs in the balance, Ostpolitik 
gives Russia a useful edge in badgering 
(Terniaiiy's allies into other talks whose 
()«Jtensible aim is detente. Thus any 
move to thwart Russia's desire for a 
Kuropean security conference—Avhose 
nim seems to l>c a sort of anaesthetised 
middle Europe — or its manoeuvres to 
push America into foi'ce reductions, 
jeopardise Herr Brandt’s Ostpolitik in 
mid-course. Such Russian importuning 
therefore becomes harder for Ger- 
many’s allies to resist. 

Herr Brandt, it is thought, has to 
be given at least tlie chance to succeed. 
In trying to s<?tt!e itg Tw open 


up trade and exchange diplomo^ts with 
Russia and with the other communist 
countries of eastern Europe, Germany 
is asking for itself what other western 
countries already liave. The trouble, 
which is not modern Germany’s fault, 
is that any softening of the security 
line drawn down Germany’s middle in 
1945 affects not just itself but the free 
world in whose name and as whose 
eastern bastion that line was originally 
drawn. It is this gut worry which 
disturl)s many. These include members 
of the National Security Council in 
Washington, plus, among others 
in Europe, Sir Alec Douglas-Home, 
Mr Heath and President Pompidou 
(not to mention Herr Brandt’s likely 
adversary in the next CJcmrian elections, 
Herr Rainer Barzel). 

The optimists of Ostpolitik, French 
and Italian as much as Gomian, argue 
that Moscow’s interest, unreliable 
though the factions in the Kremlin 
are, lies in defusing the chance of war 
at Russia's western back door. Any- 
way, Europe’s prosperity is not the old 
one of cornfields and coalmines which 


; ' " ■7>| I, ' 1 I 

SURVEY 35 

made European countries worth con* 
quering in the old days. Europe is too 
sophisticated an economy now to keep 
functioning and fruitful under the heel 
of an invader. 

That is a heartening view, if it is 
true. But it is a dangenms one too. 
By military detente and trade, Europe 
may indeed leave Russia freer to deal 
with its Chinese neighlour in the east. 
But it would also release Russian 
energies, already alarmingly footloose, 
in areas of immediate interest to 
Europe, notably Jugoslavia after Tito, 
die Mediterranean, tlie Arab oil states, 
and Russia’s southern neighbours, 
Turkey and Iran. A west Europe 
which by 1980 had done? a deal with 
Russia to detiDilitarise itself, and thus 
effectively “ go neutral ” each side of 
the Oder-Nedsse line, would be power- 
less to cope with Russian designs in, 
for instance, the Middle East — suffering 
the fate of Machiavelli’s neutral, 
“ hated by the loser and despised by the 
winner.” And a west Europe which 
opens its links with the cast will be in 
that much less of a position to resist 
the push which Moscow will doubtless 
give the vigorous though faction-ridden 
left wing parties now flourishing in, 
notably, Italy and France. The danger 
to a western Europe bereft of real 
American support is noit so much a 
Russian invasion as a slow decline into 
an unacceptalile degree of dependence 
on Russian goodwill. That is what is 
meant by die possiible “ Finlandisation” 
of the western end of the continent. 

Genmny’s foreign policy, like its 
economy, is a hinge on which the 
European door swings. During the past 
hard year that hinge has looked in 
danger of collapsing altogether under 
Germany's special burden of having 
too many contradictory friends. And 
the most burdensome of these (ieniian 
friends at present is its western neigh- 
bour, France. 







54 simvBY 


' t, H 


Brickbats across the Rhine 


The sons of Frandon, son of Hector, 
and die speakers of alemannic 
German, the “all men’s language” 
which few can understand, have ^n 
an loggerheads for so long that their 
enmity seems an elemental part of the 
European order of things. Folklore has 
it that the solution was found when 
Adenauer stayed at Colombey-les- 
deux-£g]ises in September, 195B, at 
what de Gaulle called “this Instorir 
encounter between this old Frenchman 
and this very old German in the name 
of their two peoples.” 

Their differences go to the roots of 
their two countries. France is a 
logical, self-contained emtuty, resilient 
at die end of a continent. Western 
Europe will be little and do little 
without France. France knows it. 
Naltionalistic habits like gaullisni, 
nominally “ European,” go back to the 
galHoan Catholic church and beyond 

Germany, by contia>t, is a self-made 
group, bashed togeil'cr by Pnissnans, 
constantly searching for its frontiers, 
aggressive in its in.security. French and 
Germans have fought eadi other for 
centuries. The received knowledge of 
what Germans have done to others this 
century alone causes evei a young 
Frenchman born after the second world 
war to protest instinctively at the notion 
of a (ierrnan ever being in charge: 

“ I am for a federal Europe myself, 
except that one day perhaps a German 
might be elected European presi- 
dent ...” 

When the currency affair was a fort- 
night old, and Frame and Germany 
at loggerheads over what to do about 
it, The Economist suggested ^on 
August 28, 11)71) that the Iralarwe of 
power in the EEC might change once 
the fmal anxieties over a Berlin deal 


can be removed and as the realtties 
of German economic power gradually 
assert themselves in Europe : 

Whether or not it happens in the present 
dollar ensis, the day when Germany 
asks France for a European contract on 
more equal terms than General dc 
Gaulle gave Konrad Adenauer cannot 
be for off And when the day comes, 
and Germany gets tough, it will have 
in the common farm policy, which sus- 
tains French forming, the political and 
economic hostage it needs. 

Well, so far it still has not happened. 
President Pompidou has done it again ; 
he waited for Herr Brandt to come to 
him, waited for Mr Nixon in the 
Azores, and, hey presto, the Frenchman 
who says “ no ” finds himself once again 
rourtecl and winning the prestige game. 

Or did 'he t France’s doubt is how 
long such bluff, plus the postwar 
political handicaps of being Germany, 
wi'll continue to haunt and inhibit 
fJerman economic power. The charts 
on this page show the scale of 
Germany’s economic strength. The 
sheer volume of German trade makes 
Gennany the most important export 
market for all its present common 
market partners. It takes between a 
fifth and a third of the trade of each 
of them, k is the chief customer for 
the exports of French farming. It foots 
most of the marginal bill paid out to 
support prices through the CAP. Its 
foreign reserves are far too big for its 
or anyone else’s good. Ait the same time 
Germany is itself less dependent on the 
common market for its trade than any 
of the others Its links with tlie outside 
world, in tenns of ^eer volume, almost 
dwarf those of its partners. 

What the Frencli worry about is 
the day this considerable muscle is 
used. When Herr Schiller twitched it 


in 196^ and agam this ynar, Fntnoe’i 
anti'^mian buUgerence soared from 
a Httle to a lot The outcome of the 
Wcuhington deal in December will be 
to ooncentmte Geimany’s trading 
might even more on Europe than 
before. The marie has moved little 
against the franc and the pound while 
soaring against the thrilar. France is 
therefore anxious to catch up one day. 
So President Ponopidou speaking last 
September asrd : 

Gennany today is obviously much more 
powerful economically than her partners. 
This is due in particular to the fact 
that her industrial produedon is atmut 
50 per cent greater than ours— which, 
incidentally, explains why I have set 
as our country’s main objeedve its 
development and a doubling of its 
industiial capacity in ten years. If we 
achieve this objective, wc shall come 
very close to the German level. 

And we can reach this objective 
because German development has its 
limits — in particular demographic ones 
—and because France ha'' possibilities 
and certain advantages, in particular, as 
regards the next few years, in the demo- 
graphic field I therefore think that it 
would be very difficult to make Europe 
without Gcimany and that there is no 
chance of making it without France 
£xcq>t for Italy, France has the largest 
reserves of fann labour left in the 
community. Its labour reserves in its 
existing industry are such, a raither 
cynical OECD economist says, that 
“ even if just the small firms closed 
down there would be an enonnous 
jump in productivity.” 

But how is it that Gennany can 
use so lintle of its existing economic 
supremacy ? Germany’s enemy ts 
itself, truncated by the allies, without 
nuclear arms, dependent. “Germany’s 
preoccupations are (i) the opening to 
the east, (2) America, (3) western 
Europe. In that order.” So remarked 
a British foreign servant fresh from 


‘Difficult to make Europe without Germany' 





FRANCE 

$18Imi 


HB Germany 
CD Italy 


BEUSIUMfrLUX 

$12bn 


DniD France 
ES Britain 



HOLLAND 

$12bn 

- 1970 totel exports 

BSS Belgium 8t Lux 
United States 



BRITAIN 

ilBIm 


Holland 
Rest of World 


GERMAMY 

1970 total BxportB $34bn 




Belgium 

&Lux 


Rest of Wbrid 


United States 


-Holland 




Tins aooMOiiiiit jAimaicr i] 197 s 


stiRviEy 55 


RomeExpresi 





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manufacturer produces anywhere. 
There are three which no-one else 
in Britain makes. And our output 
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ph^ols is Britain’s biggest. 


Soon, it will be bigger still 
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So we’re ready for Europe. 
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in' iiboi«oiu8T''':)AM9^ If' t97ft 

Bonn as the ddlar crisis readied a 
pitch in late November, Maybe. The 
catch is that Gennany’s major pre- 
occupaition with the communist east, 
if the OstpoUtik is not to take 
Germany off into a special relationriup 
with Russia, depends utterly on 
support by the other two, namely 
America and the test of western 
Europe. And friendship with both 
those other two is often contradictory 
in itsdf. “We less than anyone can 
afford to have the only west European 
organism which sustains us being ill.” 
The remark is that of a senior member 
of Herr Brandt’s government. 

Poles apart 

To rivalry, misitrusit and disagreement 
between ^rmany and France one 
should add an often decisive irritant 
which few, even Germans and French, 
seem to recognise for what it is. The 
workings of the German and French 
goverrunents are .so markedly different 
that they abet, and in some cases 
actually cause, the diplomaitic rows 
which arise between the two. 

By its history as much as by its care- 
ful postwar construction Iw the allies, 
the republic of west (^rmany is 
federal. Large areas of government are 
left to the local states (Landsr) and to 
local authorities. Thus when President 
Pompidou ritually complains to Herr 
Brandt that not enot^h Frendi is 
taught in German schools, there is 
little the federal chancellor can do 
about it even if he wants to. Federal 
politicians sent tn the Bvindestag in 
Bonn are a mixture of directly elected 
men plus others creamed by arcane 
voting processes from local party lists. 
This structure repeats itself in business, 
in banking and in the monetary 
control of the economy. It took the 
Prussians a century to build Berlin 
into the beginnings of a real capital, 
where government, commerce and 
culture met. Even then, the big bank- 
ing and trade dries like Frankfurt 
and Hamburg flourished as autono- 
mous centres in a way Manchester, 
Edinbut^, Lyons or Marseilles could 
never be said to have done. As for 
Munich, it was until 1918 the capital 
of a separate kingdom wirii its own 
real live, usually looney, king. 

Berlin is now detached from west 
Germany. Germany has several centres, 
Bonn far government, Frankfurt for 
banking and so on. But in the chain of 
Wg chfes running from Hambui^f in 
the north to Germany’s California, 
Munich, in the south, autonomous 


MKJ 


Corps Diplomatique 


The central direction of French foreign 
policy (run wholly by the president) is 
reinforced by a characteristic df 
Frenchmen which is difficult for 
Germans, and indeed others, to 
stomach. Frenchmen make good 
diplomats, not just public ones but in 
business as well. A Frankfurt banker 
recaUs a meeting last October in Paris 
to discuss the Franco-German airbus : 

In the morning a group of us met the 
French bankers. They mnted all 
finance and orders to be directed into 
a single selling company through 
which the whole selling effort of the 
aiihus would be channelled. 1 
personally 'thought it the best idea, 
and of course 'ffie Frenchmen argued 
it brilliantly point by point with the 
most elegant and Sinuous logic. But 
my German' colleague had instruc- 
tions not to accept it, and as the 
French didn’t feel too strongly about 
the roaitter they gave way. In the 


afternoon we met with the industrial- 
ists, roost of whom wanted a ifingle 
selling company just as the French 
bankers had done. Whereupon the 
French bankers used their same 
powers of logic to justify our agreed 
position in the morning, which meant 
intellectually demolishing their own 
and the industtialists’ preference for 
a single selling company. 

“ The reason that the Quai d’Orsay 
[France’s foreign office] has never 
wanted us in Brussels,” says one 
British ambassador, “ is that they know 
that we are the only diplomats who 
can out -hypocrite them.” “ Every 
French foreign servant,” says another 
British ambassador, ” remembers the 
days before de Gaulle when all the 
powers of logic were on his side, but 
hia minister kept getting up from the 
table to go to the telephone to see if 
he was still in power. That’s why they 
all became gaullists.” 



Singers of the master's song: Boegner end Oebr4 in the old days in Brussels 


banking amd business structures thrive. 
Localities in Germany compete for 
industry and investment. If one wanted 
to cite a single reason why the pros- 
perous lilitle recovery stock, BMW, 
has not yet disappeared into the maw 
of Volkswagen or Daimler-Benz, it is 
probaibly simply that its shares are 
stuffed proudly in stockings under a 
thousand Bavarian beds. The diffused, 
undirected pattern of modern German 
governmenit dictates the distinctly 
undictatorial nature of its internal 
policies. When the French call on Herr 
Karl Schiller to restrain the inflows of 
forrign capital to Gemian banks, or to 
limit the ambitions of American multi- 
national companies, they think that his 
refusal is based on economic theol^. 
To an ejrtcnt it is. Herr Schiller is a 


social denjocrat only in the redistribu- 
tive effects of his fiscal policy, but a 
liberal to his fingertips in economic 
management — “ the best Erhard our 
party has got.” However, it also 
happens that it is difficult for any 
German economics and finance minister 
to be anything else. Germany’s polity 
and economy are simply unsuited to 
dirigisme. 

Germany's postwar constitution sets 
this decentralised character in concrete. 
The German central bank in Frank- 
furt is not amenable to policy decisions 
taken in Bonn, though as in America 
the government of the day can hope to 
bend the central bank its way when yj 
board appointments fall vacant. UnfUkt^l 
in Paris, the government itself in Bonn 'I 
is not a centralised unit of the sort 



60 SUftVEY 

that London or Paris know. Herr 
Brandt’s government has no collective 
cabinet responsibility to the Bundestag. 
Bach minister is individually in control 
of his own ministry, each minister is 
individually responsible for his policy 
to the Bundestag. Some ministers, sucli 
as Herr Ertl for agriculture and Herr 
Schiller himself for <K:onoiTiics, 
physically sit in offices several miles 
away from Herr Brandt in the chan- 
cellery. Bonn rarely sees ministers 
resigning or being sacked. 

The place of the chancellor in tliis 
diffused country and in this diffused 
government structure is not an easy 
one. His ministers are kings within the 
chancellor’s kingdom. When Herr 
Brandt’s assistant, Herr Ehmke, tried 
to centralise more decision in the 
chancellery he lost tfie fight. 1'he 
chancellor’s role is to lay down overall 
policy guidelines, not to run the policy 
of his niiinislers who, once chosen, are 
pretty much there for keejjs. A chan- 
cellor like Konrad Adenaeur, who 
combined an alrno.^Jt mythological 
presence with a dictatorial tempera- 
ment, could rule Bonn and especially 
its foreign policy with a rod of iron. 
A man like Herr Brandt, with much 
authority but a reluctance to impose 
it in cabinet, will never do so. Except 
on Ostpolitik, which i.s Herr Brandt’s 
own, the chancellor’s ministers make 
the running. This explains a persistent 
paradox in the behaviour of a German 
economic supremo like Herr Schiller. 
He refrains from much direct inter- 
vention at home because the structure 
of German government discourages 
him from doing otherwise, while also 
being left free bv Herr Brandt to 
practice a fairlv brutal international 
monetary policy abroad, 

Herr Schiller s power of personality, 
bis grip on policy, and liis sheer domi- 
nattion of the detailed business of the 
two economic ministries which he has 
now won for himself, has tinned his 
ministerial career into a sort of 
apotheosis of this strange system of 
government imposed on Germany by 
the allies. Herr Schiller’s place in the 
German government does much to 
explain how on three separate occa- 
sions in the. past 14 months he has 
set Germany’s economic policy in 
Europe on a straight collis-ion course 
with France. This followed what was 
perhaps the most notable waterslied in 
modern Fmanco-C^ennan relations, 
when as economics minister (hut in 
those days as a member only of the 
junior wing of Germany's coa’ition 
government) Herr Schiller publicly 
demanded in November, 1968, that 


EEC 



Le Pompidou Soteil 


f ranee devalue the franc. 

Few of the Frenchmen facing Herr 
Schiller in these confrontations, least 
of all de Gaulle in 1968, have realised 
that it is not just a tough Genrian 
sitting oj>]:)osite them, but a niinister 
who has inve.sted in him by the con- 
stitution almost total control over the 
external economic policy he propounds. 
Only with reluctance and after a 
number of diplomatic explosions has 
Herr Brandt been able to restrain Herr 
Schiller’s enthusiasms. Even then he 
has only been able to do it by persua- 
sion and rmsoning (usually on the 
lines that Germany’s diplomacy 
cannot, for all its et'pnomic ]X)wer, 
expect to prevail too often) or by the 
threat of resignation by the foreign 
minister, Herr Scheel, whose Free 
Democratic party keeps the Brandt 
coalition in power. In a real bust-up 
Herr Sohiller might just be forccKi out 
but if so, says an SPD union leader, 

“ he will sign his signature on the 
bankruptcy of our government.” 

Very different in Paris 

The contrast between Gennany’s 
rambling administrative empire, in 
which princes flourish, with the absolute 
monarchy in Paris could hardly be 
more striking, Herr Schiller’s adversary 
in mary sour meetings, M. V’^alery 
Giscard d’Estaing, is less direct than 
Herr Scliiller, less driving, as clever, 
and much more devious. “ The two 
men,” said an exasperated Brussels 
comnii^sioner last August, “ are just too 
roimphc.a'tecl to solve such a simple 
problem.” With respect to the commis- 
sioner, the personal difference between 
Herr Chiller and M. Giscard, while 
entertaining, is le.ss significant in itself 
than the difference between the politi- 
cal clout each of them has. Unlike ^ 
Herr Schiller, M, Giscard has to be 
careful for he has little authority of 
his own. In Paris all authority resides 


tHE womuinr jAWAitv 197a 

in the president. In Paris anything of 
importance starts and ends in the 
Elys^e. “Where does M. Pompidou 
stand in this business ? ” one once 
asked a gau-Iliist deputy about some 
internal French row. “ That’s simple,” 
came the reply : “ on top.” The fidelity 
with which the Elyisee’s instructions are 
carried out by France’s ministers 
often seems to be increased by 
M. Pompidou’s personal foible — that 
of a man from rural Auvergne — of 
leaving things until almost too late or 
until, as he likes to say, “ they are 
ripe.” “ I do not believe in blowing 
the horn,” M. Pompidou has said, 
“ unless ffiere is clanger of an acci- 
dent.” 

It is not simply that M. Pompidou 
personally dominates his colleagues 
(which he does), while Herr Brandt 
does not. It is that France is a 
heavily centralised country, in its 
government, in business, in finance, in 
culture. Under de Gaulle’s constitution, 
hammered out for him by M. Michel 
Debr6, the president is elected by 
popular vote independently of the 
national assembly or of the coalition 
of men that he picks from the assembly 
to be his ministers. Government bills 
go to the assembly only when signed 
by the president at the council of 
ministers which meets under him in the 
Ely see every Wednesday. Likewise, 
when they go to Brussels, the French 
ministers have a man from the Elysee 
sitting behind them. French ministers, 
however brilliant, move in Brussels 
only when they are told to move. 

When the Elysee jumps 

The whole story of the British negotia- 
tions in 1970-71 illustrated well the 
supremacy of the Elysee in French 
policy making. Time and again M. 
Schumann unaccountably hardened 
or softened his line. Sometimes he was 
doing as he was told. At others he 
was, as Frenchmen are good at doing, 
wriggling under pressure from his 
partners in order not to give anything 
away until the Elysfe finally made up 
its own mind what it wanted to do. 
The most startling example of Elysee 
control, however, had M. Giscard 
simply signing away on a nod from 
his president last June an innocuous 
agreement on the future role of sterl- 
ing Which he personally (also on 
instructions from hiis president) and his 
two chief assistants alt the ministry of 
finance had previously promoted into 
the most formidable intellectual road- 
block to British entry. 

What is less certain aI)Out this 



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THE EOONOMfEV jknUfM I972 

method of French government is how 
long it will continue. On a backwash 
of gaullism, on his own skill in winning 
the confidence of a worried courttry 
after de Ciaulle resigned, President 
Pompidou won in 1969, and has kept, 
wide popular support. He also has 
a thumping majority in the assembly. 
The question is what will happen when 
either one or the other vanishes, as 
each may, in tlie mid 1970s. Tlie con- 
stitution has long procedures for deal- 
ing with a situation in Which an elet'ted 
French pmsideiit finds himself faced 
with an ungovernable elected French 
assembly. They may work. One day in 
mercurial France they may not. 

When Brandt and 
Pompidou meet 

The twice-yearly meetings of President 
Pompidou and Herr Brandt take place 
by treaty. They and an uneven flow of 
letters between the two men go some 
way to sorting the differences of the 
two countries out. These encounters 
go a long way also, particularly in 
German eyes, to keeping the two men 
who matter on decent terms when 
the debris of disagreement is raining 
down all round them. When things 
are rnanife^stly rotten, extra meetings 
(such as that between die two on 
’Decmi'ber 3rd) can thus be arranged, 
though It took Herr Brandt nearly 
seven weeks to win this latest one. 

The two men, whatever their 
policies, inevitably meet in quite 
different frames of mind. If a cri.sis 
is on, Herr Brandt’s aim is to try to 
clear up some of the diplomatic non- 
senses and unevenness of approach 
caused by his own rninii.sters. Herr 
Brandt, being preoccupied by 
Ostpolitik, has usually found hirn.self 
late in the fray and learning more 
from the French president about what 
other Germans have been up to than 
he knew when he entered the room. 
President Pompidou, by contrast, is 
discussing details of policy which he 
formulated himself. 

Britain as go-between 

Britain will hold an invidious place in 
all this. Both antagonistic pillars in 
the present European construction 
expect to lean on Britain too much. 
Anyone in Paris late fast July will 
recall the sense of letdown among 
those French civil servants who had 
just completed the major package of 
British entry. Already then, some weeks 
before Mr Nixon’s measures, but after 
the Germans had floated the mark, 
there was pent-up depression at the 
growing power of Germany, and 


EEC 

pessimisn^ about the likely reliability 
of Britain as France’s new-found ally. 
Already France had been pushed 
farilier than it is used by Britain on 
sterling and New Zealand. “ Wlien 
you take an acquaintance into the 
family, then the trouble begins,” says 
a Paris banker. The battles on strictly 
internal common market policy will 
rarely be easy, as the early articles of 
this survey .‘showed. 

The face that Euro|>e shows to the 
outside world may more easily In' 
changed by Britain. Britain has a 
Commonwealth which once accustomed 
it to being nice to poor outsiders in 
the world. France's more dependent 
colonies never liad the same effect on 
their rulers. Lately, under the present 
government.^ Britain’s generosity to the 
third world lias !)een given a lower 
priority than the lories once gave it. 
One major test will come in 1974-75 

Men of butter 

“ For God’s sake learn Italian,” Charles 
James Fox once said, “ in order to 
read Ariosto.” It lis a good reason, 
perhaps the best. B» : today, as then, 
it is calculated to make Italians feel 
marginal in Europe’s affairs of state. 
Yet Italy's population is almost as large 
as that of each of Europe's three great 
powers, Its rate of economic growth is 
higher. Then there is Benelux 
(Belgium, Holland and Luxemburg) 
w'ith only 23 million people in all, but 
with three vote-wielding foreign 
ministers sitting lin the EEC’s council 
of ministers (compared with one each 
for the big three), and three members 
between them on die Brussels cx>mmis- 
siion (compared with two each for 
Britain, Geniiany and France). 

A constant tension is present in EEC 
poliitics as a result of Italy and the 
Benelux countries trying to get on a 
par with France and Germany. “ Men 
of butter,” Charles V and his son 
Philip used to call their ruthlessly 
repressed subjects in the low countries. 
During the 1960s those men of butter, 
particularly the Dutch, occasionally 
fought back inside the EEC against 
their old ajitagoniist, France. But by 
and large they can only do so by 
threatened use of the veto when they 
know France wants something badly 
enough. Never can they afford to see 
the EEC broken up, for the Dutch 
and Belgian economies depend heavily 
on access to Germany, and Germany’s 
interest is with France not with them. 
Germany has often led the pack 
against France, only to back away 


SURVEY 63 

when Britain is silled, agednst its own, 
French and Belgian beet-grow'ing 
interests, to keeji tlie pkee in Europe’s 
market promised timing die negotia- 
tions to the exports of Caribbean and 
Mauritius sugar cane growers, 

Bui the real test Britain’s nerve 
as a Franco-ticrnian go-between will 
come in the clekite with America. 
Britain is not as politically or militarily 
dependent on tlie LTnited Stales as Is 
Germany. Its foreign policy does not 
rely as nakedly on American hentwo- 
leiicc as does Germany's Oupolitik, 
Since 1967, a ml even more since 
August and December, 1971, the streak 
of exchange rate slubUrriiricss in 
Britain wliich allowed sterling to be 
called ” the first line of defence ” for 
the dollar has been worked out. 
Equally Britain also lacks France’s 
gaullisr, but diminishing, yen for anti- 
American hloody-iniindedneHs, 


diplomatically leaving its .smaller fol- 
lowers high and diy. Italy's active 
shuffl'ings between Cremiany and 
France recently have been the result of 
the admiration in whicli its present 
prime minister, Signor Emilio Colombo, 
is personally held as a European 
technician by M. Pompidou and Herr 
Brandt, Italy also chanced to be chair- 
man of the Six for those pyrotechnic 
last six months of 1971. Its influence 
has little to do with Italian political 
power which remains .slight and 
unsteady. Italy’s miracile too depends 
on tariff-free life iaside the EEC. 

Enlargement will -see these lesser 
political members of the EEC making 
another effort to get on terms with the 
great powers. The political attraction 
for them in a political Europe has all 
along been that it gives them a voice 
and at least some power ol decision in 
European (and thus world) affairs 
which they would not otherwise have, 
Their strong wish throughout the 
1960s to get Britain into the EEC was 
based on the knowledge, first, that 
Europe could not really be said to 
exist in Brussels without the British 
and, second, that Britain might best 
balance the self-interested view of 
Europe taken by France. 

“ Those foolish Beneluxers,” said the 
a.sristant of a French minister last 
summer. “ For years they have been 
badgering us to let Britain in. Now 
we have given them what they want 
and they are going to pay for it Soon 
they will see the mistake they have 
riiade,” By which he meant that the 




Beneluxers have impqii^ed iK>t a friend spoiled only by such vulgar realities 
buit another overbearing great power as that Holland and Denmark will 
given to doing deals with its fellow tend to peel off (to the side of 
great powers. We have necessarily Germany or Britain), Belgium and 
concentxiatted in this survey on the Luxemburg (to France), Ireland and 
triangular relationship between Britain Norway (to Britain) whenever the chips 
and Germany and France, for the are down. 

working of this triangle will define the The hope of all these countries — 
success or failure of Europe itself. At Italy feeling forgotten in the .south, the 
the same time the progress that has smaller fry agi'tating in the north — is 
been made since the going of de Gaulle that Europe will bury the great power 
in keeping the minnows up to date nationalisms which so disrupt its pro- 
with what Germany and France arc gress. They are, in short, federalists 
saying to each other should be con- of the old school, and 'they fight 
rinued after Britain joins. At lea.st admiirable and sometimes succesrful 
what we have to avoid, says a gfK>d battles in Brussels designed to make 
French MachiavelKan, is “ systematic sure that the “ common institutions ” 
ostracism.” To stop this, one would built upon the commission are given 
expect to see Benelux allying itself in more and more to do. In this way, 
Brussels inside a caucus of the small their hope (sliored in a deep political 
with Ireland, Denmark and Norway — way by the Adenauer school of German 
with Italy at moments of domestic politicians) is that if enough decision 
political stability casting itself as a making and administrative jobs can be 
benevolent go-between with the three transferred to Brussels, then the federal 
great powers. It is a nice picture dream can be made true — by stealth. 

Hamstrung in Brussels 

When Europe was less rich — ^aixi more with the Treaties of Rome and Paris 
frightened — 'the hope in the 1930s was and with subsequent decisions, 
that national disputes of tlie sort The chief mechanism to hold the 
retailed in this survey would one day Brussels bureaucracy in check is the 
be sunk in a singir European authority, council of national ministers. Each 
The high authority of the European minister sitting on the council is 

coal and steel community which answerable to his own head of state 
opened shop under the Treaty of and to his own national parliament. 

Paris in 1953 and the Brussels com- Thanks to de Gaulle in 1965 all 

mission which started work under the decisions of any consequence, though 

Treaty of Rome in 1938 were to be formulated by the commission, have to 
Europe’s protoplasts. be taken unanimously by the council 

The technique for reaching a single or not at all. This tends to mean that 


Europe itself has a “ pariiament ” in 
Stxodboui^ which draws its appointed 
members from a sample of members 
of niaitional assemblies who then sit in 
rough party groupings across national 
lines. (There is, for instance, much 
intri|^e att present to try to peisuade 
Britain’s Tories to sit with the isolated 
French gaullists in Stra;^t>oiug rather 
than whh the liberals or more 
numerous Christian Democrats from 
elsewhere.) In a suitably French circle 
of logic, Fraoice refuses to allow Stras- 
bourg to be directly elected until it 
has more power of decision, and 
refuses to allow it more power of 
decision until it is directly elected. 

Ihe EEC is also equipped with a 
court of justice sitting in an office 
block in Luxembourg to which the 
commission or those afifected by its 
decisions can bring cases against each 
other. At one time or other each of 
the Six has had to curtail a national 
policy as a resuk of a court deciision, 
but by and large the court tries to 
elucidate a common legal line with the 
advice of national courts in the Six 
rather tlian to lord it over them. 

Lastly, the EEC has a full comple- 
ment of mostly useless committees 
(the monetary committee being a major 
exception) which are supposed to join 
various social and other interests in 
the member states together with the 
commission and other institutions. 

Altogether it is a neat structure with 
great possibilities. It is not the over- 
bearing bureaucracy of British anti- 
marketeering folklore. The commission 
is about one-sixth the size of Britain’s 


Europe was .to be that of “ engrenage ” 
— the meshing of gear wilieels — devised 
during the iqsos by M. Jean Monnet, 
When Englishmen go to Brussels they 
will find that the escalators from the 
underground traiiis start moving 
upwards as soon as they put foot on 
the bottom step. It then becomes 
difficult to go back. M. Monnet’s 
theory was like that. It meant starting 
at the bottom, first wftili coal and steel 
and next with tariffs and farming, and 
then giving an independent commis- 
sion the sole power inside the EEC of 
reinforcing old policies by proposing 
new ones. So common farm prices 
would lead to fixed European parities, 
to a reserve hank, to centralised econo- 
mic management and so on up to the 
European superstate. In theory, as well 
as initiating common policies, the 
commissiion is also charged with 
executing them, using national agencies 
as its instmments where necessary. So 
it has powers to order governments, 
companies and others to keep in line 


the commission in fact does not act as Department of I'lade and Industry. 
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TSB tOOMOMlST JANUARY t, 


SURVEY 65 


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/ 


If*" 


msnon been for some time a very 
imaginative or efficient group of men. 
Together with the secretariat of the 
council of ministers, its handhng of 
the legalities and translation of 
Britain’s treaty of accession has been 
poor. It utterly misjudged the mone* 
taory crisis in August. Its tendency to 
dabble in the usdess preoccupations of 
disillusioned men was exemplified a 
few months ago when the c(»nnnssion 
found against the German government 
for restricting to German nationals 
the design competition for a medal for 
the Munich Olympic games. 

At its best the commission does a 
hard political job well. Commissioners 
are appointed by their own govern- 
ments (and can be effectively vetoed 
by others), but they are supposed to 
be independent. Thus the longest 
standing commissioner, Mr Sicco 
Mansholt, guides the annual farm price 
review, as he did the original farm 
policy, through a jungle of agrarian 
nationalism. That he gets any results 
at all, though usually far from what 
he hoped, is due to Mr Mansholt’s 
sheer toughness, memory and skill at 
grafting compromise. In the worst 
year yet for Atlantic trade relations, 
the commission’s newest member and 
intellectual gadfly, Herr Ralf Dahren- 
dorf, has none the less much improved 
—by humour and good English-^he 
commission’s standing in the halls of 
both Congress and the Administration 
in Washington. 

The commission makes its enemies 
because neither the majority of its nine 
“ independent ” commissioners at the 
top, nor its staff below, ha\'e yet worked 
off the neurosis weighing down on 
them since their hero. Professor Walter 
Hallstein, overstepped the mark against 
General de Gaulle in 1965. With Hall- 
stein and his successor, the Belgian 
Jean Rey, went the much-recalled days 
of the “ strong commission." It is hard 
today for the coimnissioners to be 
right whatever they do. Their preseait 
president says little and is not heard. 
The monetary commissioner, M. 
Raymond Barre, a favourite among 
anti-Briltish gaullists in Paris, ran the 
hasre of the sterling balance problem 
on their behalf, thinking he had Preri- 
dent Pompidou’s support, and came a 
dreadful cropper when Pompidou 
undercut him — “a moment I shall 
relish until the end of my days,’’ says 
a British negotiator in the room at the 
time. By contrast, M. Jean-Francois 
Deniau, France’s other commissioner, 
recently tried asserting his indepen- 
dence by writing newqsaper amdes 
which dikussed £urcq)een defence, and 


has for the moment lessened his chance mit meeting between the Six, Britain 
of being af^inted the commission’s and whoever else joins drew the 
next president as a result. News of remark from an inmate of Downing 
the commission’s attempt under Street ; “ I don’t see Ted listening very 
M. Deniau to prepare an “ agenda ’’ much to what Deniau has to say on 
including defence for this year’s sum- such matters, do you ? ’’ 


When Whitehall arrives 


Brussels never can get used to the dis- 
regard for its views in the natiomal 
capitals. The hope is that British entry 
might change this. In a strange way it 
might. Britain will come to Brussels 
with five changes in mind which at 
least to some extent will start other 
changes of the sort that perhaps only 
a newcomer can foster. Significantly, 
three of the changes have nothing 
direody to do with the commission. 
Their combined motto seems to be that 
of Pope (quoted by Ian Davidson in 
his excellent book, “ Britain and the 
Making of Europe ”) : 

For forms of government let fools 
contest ; 

Whatever is best administered is best, 

(i) The first British change has 
happened already — ^in the person of Mr 
Michael Palliser, invKlously described 
as “ one of the high-flyers of the 
diplomatic service” by Mr Harold 
Wilson, for whom he worked at 
Downing Street. He was interpreter 
in the two unhelpful talks Mr Wilson 
had with de Gaulle. He was also inter- 
preter in the Heath-Pompidou talks 
last year. From being minister in the 
Paris embassy, he has now been made 
Britain’s ambassador to the community. 
This means that when Britain joins 
on January i, 1973, he will become 
its “permanent representative” in 


Brussels, sitting on the committee of 
representatives whose often decisive 
role is to spy upon, bully and make 
deals with one another and prepare the 
ground, together with the commission, 
for meetings of ministers. After bis 
peculiarly privileged career, Britain 
starts its days with a man in Brussels 
who will have seen more of how 
Europe’s decisions are actually made 
than will his longer-standing opposite 
nuimbers. 

(2) Britain comes to Brussels in the 
modern manner. This consists of 
frequent meetings at the top between 
individual heads of states and their key 
plenipotentiaries, plus very occasional 
grand summits between all Europe’s 
heads of states at once. This “ inltcr- 
governmen'tal ” way of doing things 
naturally distresses the federalists. But 
it gets things done. Now at last the 
commission seems to have realised that 
summits, however anti^supranational, 
are here to stay and .so must be made 
to work — “ like Buddhists,” says a 
.seasoned European in The Hague, 
“ the commission is now burning itself 
for the cause.” 

(3) When governments meet hence- 
forth they will probably not sign 
treaties like those of Paris and Rome, 
Rather they will, if Britain has its 
way, make “contracts” among them- 




68 SURVEY 



selves to explore new areas of policy 
togetlier— defence, foreign policy and 
pollution control being obvicus ex- 
amples. The way in winch tht-se new 
contracts iriiigiit be carried out is 
sketched on this page, next to a sketch 
of how things arc done at present. The 
differences between rh(i two ai‘e ini- 
portant. The new coininissions in new 
areas of policy would be instigators of 
new ideas ; they might <‘ven be the 
same body of men serving as a 
secretarial to national ministers. But 
they would not be the consecrated 
guaRlians of a treaty, nor the sc^le 
instigators of new ideas, as the Brussels 
commission pretends to he at present 
even though it lacks the weapons to 
be either. Mr Heath has several times 
suggested that such new, .smaller, 
European structures would be built 
alongside — but not, as Belgiurii’s 
foreign minister, M. Pierre Harmel, 
would prefer, as part of — -rhe existing 
Brussels agencies. In common defence 
and foreign policies, something tighter, 
more discreet and less laborious than 
what vet exists in Brussels is needed. 

(4) Britain lias it in its f)ower to 
make the existing commission itself 
more effective. Next January a new 
coniruission will he appointed — unfor- 
tunately with 14 members fif Ireland, 
Denmark and Norway also join) against 
the more manageable nine at pre.sent. 
Britain will have two commissioners, 
and, savs a Frenchman, “we have 
several lists in our pocket ; we will use 
whichever one best matches up with 
what Britain does.’’ Britain should, if 
it can find them., nominate politicians 
w'ho have clout Ixack home in both 
major parties and who are al>ove all 
quick moving and ruthless in political 
in-fighting. Nice chaps won’t do. 
Failing acceptable politicians, Britain 
should nominate onlv civil servants or 
others of a sufficientlv driving* even 
bloody-minded, cast of niipd, whose 


BEG 

aim is not supranaiCbnalism but effec- 
tiveness. The cojnmission needs shaking 
up, even if the men to do it will 
inevitably be the kind to cause 
occasional heartaches back home. A 
Frenchman will doubtless get the 
presidency of the commis.sion ; this is 
long overdue. Britain should demand 
M. Barre’s present portfolio for 
nionotary affairs. 

Britain will also be putting some of 
its men into the staff of the commis- 
sion. They too should be good, but 
the snags are manifold. Making room 
for them will either cause bitterness 
or inflate a bureaucracy which is 
already top-heavy. Second, as indepen- 
dent employees they w»ill worry about 
their places on the ladder back home 
(none of the Six has satisfactorily 
.solved this). Third, they will be paid 
less as employees of the commission 
than British servants get when working 
abroad for Britain (and may go with- 
out education allowances for their 
children). Fourth, too many top men 
in every domestic British ministry 
except the DTI are trying to stop their 
best people going to Brussels, because 
they rightly sec the commission as a 
rival. Fifth, the foreign office is hoping 
to hog all the best jobs. And sixth, 
for all these reasons, the best among 
thorn do not want to go—" I do not," 
says one eminent candidate, “ believe 
in sleeping with the patient." “ We 
were the safe-breakers," says another, 

“ I don’t think the .same men can now 
really afford to come up from the 
cellar covered in cordite.” 

(f)) The least expected change from 
British entry could well be in Stras- 
l)ourg. The attempt to have this 
“ parliament " directly eleoied should 
be dropped, for it actually stands to 

Europe begins 

British entry has cleared the air. But 
the challenge put by America is still 
unmet. As the French journalist, 
Raymond Aron, elegantly puts it : 

“ Like the (Greeks in their decadence, 
we are in danger of telling our pro- 
tectors how barbarous they are." 

What those Britons still hostile to 
entr>' .‘sliould understand is that Europe 
can now be what Britons and Euro- 
peans decide to make it. This means, 
also, that if E'.irope should ever be 
destroyed, then Britons too .should be 
given a say in its destruction, not be 
left gaping outside. The common mar- 
ket may seem like a free-wheeling 
capitalist lobby at times, but that is 
because it reflects the style of its pre- 


TUB ECONOMIST fAKUARY 

make it less rather than more effective. 
To carry any weight when it matters, 
deputies to Strasbourg must be mem- 
bers of national parl'iaments. Provided 
time can be found for them to go there 
— -100 days a year — British MPs will 
have a greater impact in Strasbourg 
than most of its existing members do. 
Among British members going to 
Strasbourg (there should be sceptics and 
anti-marketeers ready to make life hot 
for the commission. In addition 
Britain should also press for something 
new : namely that tlie ministers of 
national governments be questioned 
in Strasbourg after meetings of the 
council of ministers, and at any other 
time. Further the uneleoted Strasbourg 
assembly should be the only organ of 
the present EEC whose brief is 
extended into monitoring the activities 
of the new policy “ contracts " and 
commissions outlined in (3) above (ie, 
defence as well as tariffs and farming). 
In this way the bogy of supra- 
nationalisation will not be raised, for 
Strasibourg will have no legislative 
power. But “ one Europe " will iffien 
exi^t in a 'body which will alone vet 
all the separate bits of European policy. 
A few compulsory parliamentary con- 
tests 'between Mr Michael Foot or Mr 
Denis Healey and M. Debre would 
do more for “Europe" than years of 
.solemn and secretive defence policy 
meetings. 

Only half in jest, Britain might ask 
for one more thing. All Brussels meet- 
ings should compulsorily end at 10.30 
pm — even if this means reconvening 
at breakfast time. The present mara- 
thons are puerile, and ach'ieve nothing 
that a deadline and the threat of 
being compelled to stay in Brussels 
another day might not equally achieve. 

here 

sent national governments. If socialists 
wish to change this, they have only to 
win power at the national level where 
European power lies. That is what 
politics is all about — as the socialists 
know. “ What is Europe ? ” says a 
Grerman socialist near Herr Brandt. 

“ It is a space ; you have to fill it.” 

Britain’s arrival in Brussels opens 
up the European mind like that petite 
madeleine dipped in France’s most 
evocative cup of ‘tea : “ It is face to 
face with something which does not 
so far exist, to which it alone can give 
reality and substance, which it alone 
can bring into light of day.” Marcel 
Proust perceived that what is not seen, 
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45 


/loahw 


The logs of war 

The Public Records Act of 1967 
reduced the closed” period for 
government records from 50 to 30 
years and went a good way towards 
assuaging the insistent complaints of 
historians that, when it comes to the 
release of public documents and 
records, Briti^ officialdom is notably 
unpermissive. But it is one thing for 
a prime minister to announce that a 
mass of material is to be released and 
quite another for an overworked staff 
at the Public Record Office to sort, 
process and catalogue seven miles of 
shelving from a dozen different depart- 
ments. Nevertheless, the archivists went 
to work and in January, 1970, and 
January, 1971, the records for 1939 
and 1940 respectively were made avail- 
able to the public. But the business of 
releasing the records for one year at a 
time was clearly frustrating to those 
anxious to cover the whole of the war 
period from 0!ie or other aspect ; so 
throughout 1971 the Public Record 
Office has been hard at work to release 
as much as possible of the records for 
1941-45. An enormous mass of material 
covering every aspect of the war effort 
now becomes available to research 
workers, situderits and the public. 

That still, of cmirse, docs not mean 
everything. There is a fonnula by which 
even documertts over die prescribed age 


may be kept secret if they would affect 
the security of the state or really upset 
some living person. There is still no 
sign, for example, of the Halifax-Hoare 
correspondence, a curious omission 
noted last year. There is more for 
which release is promised but is not 
yet available. The papers of Ohurchill’s 
private office, kept ait No. 10, are a 
tantalising item in the record office's 
just-published handbook*, “ The 
Second World War : A Guide to 
Documents in the PuUic Rei:ord 
Office.” 

What are now available are the 
records of the cabinet office from Janu- 
ary, 1941, to the end of the caretaker 
government in July, 1945 ; the war 
cabinet minutes and memoranda and 
the records of the various cabinet com- 
mittees ; and the minutes of the chiefs 
of staff committee. The veins to be 
worked in this new mine of historical 
material are, therefore, rich and varied. 
For students of military strategy there 
are also the subcoimnittees of the 
chiefs of staff covering the different 
theatres of the war. For students of 
naval history and strategy there are 
the minutes of the war cabinet commit- 
tees on the battle of the Atlantic and 
anti-U-boat warfare. There are the 
records of the various ministries supply- 
ing the war effoi^t. The cumulative 
impression left by this new evidence is 

*HMSO, £ 2 . 90 . 


of how tightly the whole economy was 
geared up to meet the war effort and 
kept at this pitch, with some skill, right 
through to, and of course beyond, vic- 
tory. I'he problem of co-ordinating the 
many newly created ministries was 
clearly immense ; co-ordination 
became almost an end in itself for 
some committees. The record office’s 
handbook dryly notes, in what may be 
the archivist’s special blend of humour : 
“ The records of some departments 
provide useful information on the 
activities of others, particularly where 
there is some kind of co-ordination 
through joint bodies.” “ Joint bodies ” 
include such curious animals as the 
“ Interdepartmental Committee ori 
Wartime Contravention of Building 
Laws.” 

More significantly, the origins of the 
cold w'ar can now tie traced, in the 
newly available records, right through 
the increasing difficulties with Stalin 
over the provisional Polish government 
settled in London, headed by Sikorski 
up to his death in 1943 and then by 
M'ikolajczyk. (I'he Ru^s^1ians claimed 
to recognise the Polish (^ornmittee on 
National Liberation, discovered by 
Russian troops moving through Poland; 
Stalin knew that, in war, territorial |X)s- 
session is ten points of the law.) For his 
part, Stalin was lx>und to resent the 
unique intimacy Churchill enjoyed with 
Roosevelt and thus his ability to call 
on the vast reserves of the “ arsenal of 
democracy” to support or bolster his 
plans both for the conduct of the war 
and' — of increasing importance as tiie 
war neared its end — for postwar ter- 
ritorial settlements. The large number 
of telegrams between Churchill, Roose- 
velt and Stalin give a very good 
measure of the tartness of some of the 







exchanges : they also xnake Churchiirs 
pc^itical strategy of always obtaining 
RooseveltV agreement before putting a 
contentious matter to Stalin abundantly 
clear. 

But it is the strategic and political 
problems of co-operation and conflict 
among the allies that are of central 
interest. Churchill gave his own 
account, of course, in his six volumes, 
but he undoubtedly understated the 
amount of dispute. On May 2, 1944, as 
the Normandy invasion was imminent 
(code name “ Overlord ’*) the cabinet 
minute records : 

The prime minister had not fully realised 
that air power before Overlord would 
assume so crufi and remorseless a form. 
It was clear that great slaughter would 
inevitably result from the air attacks. . . . 
He felt that these operations should be 
governed by some laws f‘f war to warn 
the inhabitants. 

This brief minute is revealing in 
several ways — as an insight into Chur- 
ohi'irs attitude to the carnage of war, as 
evidence of yet another strand of dis- 
agreement between the allies (tense 
over Eisenhowers plan to neutralise 
about 80 railway centres in France by 
aerial bombardment), and again for 
the degree of personal direction by 
Churchill of every phase and aspect of 
tlie war effort, 'rhis had its lighter side. 


Australia 

Bhutan 

Brunt) 

Burma 

Cambod.a 

Ceylon 

Ch-na 

Hong Kong 

India 

Indonosla 

Japan 

Laoa 

Macao 

Malaysia 

Mongol. a 

Napal 


New 
Ze-aiflnd 
North KorM 
North 

Pak istan 

Phil ppir'« 

Ryukyus 

Sikkim 

S'ngapore 

.South 

Korea 

South 

v iifinam 

Taiwan 

T ha. land 



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One might suppose that when 
Churchill returned from the Moscow 
conference of October, I944> where 
with Stalin he carved up the Balkans 
into spheres of interest for Russia and 
the other allies, this would have domi- 
nated discussion in the cabinet. But 
Churchill’s first item on the cabinet 
agenda on resuming the chair was 
much more parochial : 

The prime mlinisttr .said he wished to 
raise the question of the supply of beer 
and ammunition to the British troops on 
the Italian front. He was informed that 
the American soldiers had four bottles of 
beer a week and the British soldiers only 
one bottle a week. . . . The secretary of 
state for war saiid that he thought that 
supplies could be increased, but at the 
cost of reduction of consumption here. 
The prime mini. 9 ter replied that such a 
reduction should be made in order to 
ensure a proper supply of beer to the 
fighting troops in Italy, 

A good deal of the cabinet’s time 
was taken up with discussion on the 
“ difficulties ” with de Gaulle in 
London. In cabinet on June 7, 1044, 
the prime minister 

. . . reviewed the course of relations which 
had had an unfortunate effect on the 
[American] president’s attitude U>wards 
de Gaulle. He himself had been driven, 
in the light of experience, to feel that 
there was a very substantial justification 
in the president’s view. Indei^, he had 
felt obliged, whilst in Washington on 
May 21, i£?43, to invite the war cabinet 
to consider terminating our reladons with 
the general. . . , 

In December, 1939, the secretary of 
the war cabinet sent to the BBC a 
complaint about the way that the BBC 
news bulletins gave the weekly tonnage 
of our merchant Shipping losses. One 
bulletin had ended with the cheering 
words ; “ This is the third highest 
weekly loss since the beginning of 
the war,” which provoked the tart 
comment : 

German propaganda could not do better, 
than this. ... I can think of nothing more^ 


demoralising to the family by the evening 

fireside. They will go to bed thinking that t 

the war is half lost already. 

The way in which the Churchill 
government was forced to learn one of 
the more disagreeable lessons of total 
war — the need for effective propaganda 
day in and day out — is a theme worth 
tracing in this new evidence. 

The cabinet office was pestered with 
ingenious schemes for defeating the 
enemy and a special file was kept on 
citizens’ plans to withstand an invasion 
of Britain between 1940 and 1944. A 
letter from Stoke Newington in 
October, 1941, demanded of the 
cabinet : “ Have you thought that the 
Germans may now be constructing a 
tunnel, at this moment almost com- 
pleted, coming up somewhere in Kent ? 

. . . The Germans are capable of doing 
this in a very short time.” To which a 
bland civil service reply was given : 

“ I can assure you that the contingency 
which you suggest has in no way been 
overlooked.” Another citizen was con- 
vinced that the invasion would come in 
one-man collapsible canoes, and his 
six-page memorandum urged the 
government to counter the threat by 
spreading i tnillion tons of oil around 
the southern coasts, to be ignited at the 
proper moment by means of potassium. 
But since a covering letter arrived from 
a large oil company, the patriotism 
was possibly i»t unalloyed. 

A more inspiriting glimpse of the 
British people during the war is given 
in a brief private note from " Pug ” 
Ismay to a friend, commenting that 
when the prime minister virited the 
bombed sites of London under die blitz 
he was continually amazed by tiie 
universal comment of homeless : 
“We can stand any ttmounlC this- 
Go on hitting him hard.*'' 




Too Cavour by half 

VICTOR EMANUEL CAVOUR AND THE 
RISORQIMENTO 

By Denis Mack Smith. 

Oxford University Press, 396 pages. 


If Mt Mack Smith were a decade or 
two older he would probably be 
writing a great “ History of the Risor- 
gimento” in a dozen volomes or so, 
and it would be generally recognised 
that Mr E. H. Garr has a peer. As iit 
is, the transformation of nineteenth- 
century Italian history whidh he, more 
than any other writer, has brought 
about will probably have to wait, for 
its definitive presentation, for another 
hand. Mr Mack Smith continues by 
indirection to find direction out. His 
immense learning, liis extreme clear- 
headedness, and hds flair for things 
Italian (marred only by a certain flat- 
ness of style) are displayed only in 
purely academic studies on limited 
topics, in texitbooks such as his “ Italy : 
a Modern History,” and in his “ His- 
tory of Sicily,” which magnificently 
straddles the gulf between the general 
and the particular. His faithful readers 
find, after a book or two, that his view 
of the risorgimento is not merely 
perfectly clear but has become their 
own. They continue to welcome new 
variations on the theme, for Mr Mack 
Smith is perpetually deepening and 
sharpening his interpretation. His latest 
book well illustrates the point. 

Its most original element is its por- 
trait of Victor Emanuel II. The re 
^alaniuomo has never before been so 
fully treated in English, and haDs sel- 
dom been so faithfully dealt with in 
any language. His great n>le in Italian 
History is clearly brought out. It was 
not a heroic role, of the kind the king 
craved. On the contrary, we are shown 
how his moral cowardice, his military 
and poiitical incompetence, his menda- 
city, brag and haughty isolation from 
his subjects created a disastrous politi- 
cal tradition. Several times in the reign 
(perhaps most notably during the 
Franco-Prussian war) the king’s folly 
brought his crown and country to the 
brink of total ruin ; several times it 
was his idleness and inefficiency, as 
umch as a certain residual realism, that 
averted disaster. Somethinp; straight- 
forward, something ludicrous, in 
Victor Emanuel ma& him, ultimately, 
a not unlikeable comic character ; but 
his polifticed legacy was most unfortu- 
nate. Right up to the fall of Mussolini 
fbe kinp of Italy felt free to meddle 
in politSos in speh a way ^ to under- 
ntine the fiariiament^ poliftticians. 



Cavour: brilliance neutralised 


These in turn could only protect them- 
selves and the monarchy by a policy of 
silence : all too many matters might 
not be discussed in public. Fundamen- 
tal questions were evaded, and the 
regime, which thus could never adapt 
its institutions sufficiently to necessity, 
never put down deep enough roots. 

Some pf the blame for this also 
attaches to Cavour, though he was the 
only statesman who ever succeeded in 
bringing the king under complete con- 
trol. Mr Mack Smith’s ic-evaluation of 
Cavour is well known, especially his 
opinion that in both judgment and 
good faith he was inferior to Garibaldi. 
This view is amply reinforced by the 
present volume ; it is summed up in 
Lord John Russell’s sigh : “ If would 
but run straight, alii might be well.” It 
is fascinating to watch die v^y in 
which Cavour neutralised his own 
brilliance by bis hand-to-mouth poli- 
cies and his extreme deviousness, until 
one can only marvel at the luck which 
in spite of everything repeatedly 
brought him triumph. Nevertheless Mr 
Mack Smith’s most important chapter, 
Cavour and Parliament,” shows how 
it was the great parliamentarian’s 
handling of Italy’s infant assembly 
w^hddi Irft most mark on the future ; 
and in spite of Cavour’s liberalism, it 
was his high-handedness, and the prac- 
tice of transformisin, by which all 
party differences were smothered in 
vacuous compromises, that piredonn- 
nated : again, an unhappy legacy. 

Planters' punch 

ENGLISH MONEY AND IRISH LAND 

By Karl S. Bottigheimer. 

Clarendon Press : Oxford University 
Press. 240 pages. £325. 

The ixxMs of the Irish problem lie deep 
in the history of the half-conquest erf 
thait unhappy land. The Engli^ inte- 


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9^fm. 


THE EOmppinET 


rest in Ireland, first asserted in the 
twelfth century, remained ipaipnal 
outside the immediate area of Dublin 
until the reformation. After that an 
unsubdued Catholic Ireland was a 
potential Achilles ‘heel of Protestant 
England in its conflicts with Caitholic 
France and Spain and its subjection 
became a necessary act of self-defence. 
The policy of rule through native 
chieftains was tried and failed. As a 
‘result the policy of the wholesale con- 
fiscation of Irish land and its setde- 
ment by English Protestants was 
alttempted. The first major exercise in 
this direction was the Ulster plantation 
in the reign of James I. This planta- 
tion, which gave rise to a broadly- 
based and numerous Protestant colony, 
was based on wholesale dispossession of 
the native inhabitants following the 
defeat and exile of the native chief- 
tains O’Neill and O’Donnell. The sense 
of immemorial grievance which sur- 
rounds its existence to this day gives 
to Ulster life an irrational quality quite 
incomprehensible to the inhabitants of 
the other parts of the United King- 
dom. 

The next essay in plantation and 
confiscation took place some 40 years 
later, in Cromwell’s day, and this book 
is a detailed and painstaking study of 
some aspects of this episode. The 
native Irish rebelled in 1641 against 
the Englisli Protestant settlers in 
Ulster. Reports of shocking massacres 
reached London and Parliamenl 
devised the expedient of raising money 
for the reconquest of Ireland on the 
promise of Irish land. Those who sub- 
scribed this nioney were called “ the 
adventurers” ; they were mainly mer- 
chants of the City of London. Tliis 
book is concerned with their role in 
the Cromwellian settlement of Ireland. 
Following the defeat of the king in 
England Cromwell subdued Ireland 
with a ferocity that still stirs resent- 
ment in Irish breasts. TT-ie adventuiers 
and the soldiers were paid off in land 
confiscated from Irish landowners. 
However, most of them sold out to 
larger interests with the result that the 
Cromwellian settlement did not suc- 
ceed in giving Ireland a strong Pro- 
testant yeomanry of English de.scent. 
In this respect it differed from the 
earlier Ulster plantation and was ulti- 
mately less permanent in its effects. It 
did, however, result in 0 Protestant 
landed ascendancy which dominated 
Irish life down to the Land Purchase 
Acts early in the present century. 

This book is a furthei example of 
the valuable work being done in die 
reinterpretation of Irish hisitory by 


fopeigii scholais. However, it is not 
easy reading and the author fails to 
gather togedier his main conclusions. 
The important works on the Cromwel- 
lian settlement by Sir Michael 
O’Dwyer and Mr Edward MacLysaght 
are strange omissions from the appa- 
rently exlmusfcivc sources. It is a regret- 
table limitation of the work that 
surviving records do not apparently 
permit any close demographic study. 
Dr Bottigheimer’s significant contribu- 
tion is to establish that the settlement 
vvras a response to the fiscal needs of 
the Engli.sh Exchequer to meet the 
costs of the Irish wars rather than an 
exercise in colonisation for its own 
sake — and this was undoubtedly its 
ultimate weaknc.ss as a political exer- 
cise. 

Unconscious parodist 

Sm ARTHUR SULLIVAN 
By Percy M. Young. 

Dent. 317 pages. £4. 

Who remembers “ Ivanhoe ” or “ The 
Golden Legend ” ? In 1880, when 
Arthur Sullivan had conducted another 
“ sacred musical drama ” at Leeds, the 
Musical Times darkly observed that 
“ Mr Sullivan knows best where his 
strength lies.” Indeed, he must have 
done, though he felt little pride from 
his work with Gilbert. The serious 
musician was always trying to get out, 
and it came out at its worst with a 
banality and religiosity that sound like 
a parody of anything that he could 
have hoped to say. The solemn and 
earnest qualities gave him standing in 
the limited artistic environment of 
Victorian England. Dr Young’.s por- 
trait shows Sullivan at home with the 
greatest, a craftsman of undoubted 
excellence, hut a compromiser and a 
hypochondriac. It i.s a fascinating 
picture, always charitable towards 
Sullivan, but realistically critical of his 
weaknesses. 

Dr Young reveals -that the Savoy 
^eras were bringing Sullivan £20,000 
v.tiich was real money and 
lightly taxed, tliough it hardly excited 
liiiTi. (He got rid of part on a short 
and poorish string of racehorses.) In 
these v/orks he composed meticulously, 
and with a gaiety better and fresher 
than Offenbach’s that has survived a 
century^, but he never accepted or even 
understood them as a worthwhile 
caricature of almost all the values that 
he stood for. The radical biting stuff 
that Gilbert set him to compose was 
hardly more comfortable than Gilbert’s 
shamrfully acid treatment of him. 



Sullivan : reluctant radical 


Words versus music is the perennial 
conflict of the musical theatre. Strauss 
wrote “ Capriccio ” on this theme — 
and had his own share of fights with 
von Hofmannsthal about wliich came 
first. Gilbert and Sullivan did not 
argue, but produced a unison in their 
work, if not in their relations. The 
irony of Sullivan’s success is that it was 
accorded to the one branch of his work 
which he esteemed least. 

To please the British 

THE FRENCH AND THE DARDANELLES 

By George H. Cassar. 

Allen and Unwin. 294 pages. £4. 

Military historians writing in English 
used to like to write about victories. 
Now, members of an old order in 
decline, they turn to defeats ; this book 
is subtitled “ A Study of Failure in the 
Conduct of War.” Dr Cassar wTite.s 
from Ypsilanti, Michigan, but has done 
plenty of research in Europe ; some of 
his b^ sources he conceals, lest hordes 
of research studems descend to plague 
them. His book carries some of the 
strength and force of an author who 
has got to the bottom of his subject, 
and can explain what he found there. 
He has stec^d himself so much in 
French archives that his English syn- 
tax is sometimes distorted ; but his 
story is interesting enough to command 
the attention of any sensible reader. 

He hardly looks at the problems of 
the fighting soldier or sailor on the 
spot-^the stench, wire, flies, dysentery, 
the peipetual fear of submarines, the 
awful intimacy of Gallipoli where the 
enemy might live only a few yards 
away. But he gives a dear—dieadfully 
dear~picture <rf the troifliiles the poli* 



rm, MooMOMtiy /AiUMiinh i, 


49 


tical itmtegiita made for themwlves in 
Paris. They joined in the expediticm 
originally to please the Britiah, whom 
they ndstnutid. They needed omattant 
reassumnoe that the BiMsh were not 
mally ahning ait Alexandretta (Iskan* 
deran), whidi they believed fril in a 
wholly French sphere of acquisiltion. 
They were aiqalled when the British 
reveised the policy of over a century, 
and offered the Russians Constanti- 
nople ; but, loyally, they tagged along 
wmi their allies. Their main diffkultv 
they shared with the project’s Britiah 
initiators: it was a grand strategic 
concept, which nobody had thought 
through to an adequate condusnon 
before it was launched, “ an enteiprise 
that was brilliant in conc^ion but 
deplorable in execution.” 

As it turned out, the expedition was 
of use to the Paris politicos. The radi- 
cals among them were anxious to find 
a command-in-chief for General 
Sairrail, the one senior Frendi officer 
who was ami-clerical, pro-Dreyfusard, 
and acceptable to freemasons. ” In the 
west the politicians had no ends and, 
therefore, they allowed the military 
commanders to impose military ends 
upon them.” In the east a political end 
was perceptible : to find a niche for 
Starred. He was appointed to oommand 
an eastern expediltionar)’ force ; Galli- 
poli was safely evacuat^, without the 
“supreme and hideous disaster” Cur- 
zon foresaw ; and Sarrail settled down 
at Salonika, with half a million men, 
till the autumn of 1918. It made an 
inglorious end to a clasac of faulty 
oo-ordination. 

Foreign business 

Mirage 1 ^ Jack Gee (Macdonald, 
£2.95). '^ere are times when a 
pretty indifferent bode deserves to be 
read for duty rather than pleasure, 
because it is the only one in its field. 
Anyone concerned for the future of 
aircraft building in this country needs 
to know how France, with a so much 
smaller industry, has managed to build 
a.s successful a fighter as the Dassault 
Mirage and export it to so many 
countries. Mr Gee is the best avail- 
able guide until a better turns up. He 
has taken the trouble to exainine the 
lurfous Dassault organfsation and its 
I lace in Frendi politiios. As he lives 
and writes in France, his judgments 
are close enough to the marie. They 
may be supexfi^ and his style prolix, 
pui^e and padded, but there is a g(^ 
dunce of ending the book knowing 
laiore about tl^ie French, M. Dassauh 
and hss Miiittge than whm you itasted. 


Jane’s Major ComiMnies of Europe 
edited by Lionel Gray and Jonath^ 
Love (Jane’s Yembodes, £15). Unlike 
Jane’s compendia on military hard- 
ware, this hefty volume has few 
revdations to make. It is none she 
less a handy book to have, rather like 
a combination of Moody and Extel 
cards put together on a European scale. 
But the selection necessary to pack so 
much information into a single volume, 
however large, means that most people 
whose job is the study of companies 
will pay the extra and take Moody 
or Extel (or both) instead. 

Who Owns Whom : International 
Subsidiaries of US Gompanies, 1971 
(O. W. Roskill, £10.50). This book 
classifies the 22,000 or so subsidiaries 
of American companies by parent 
company, willh addresses, and lists 
them alphabetically. The coverage has 
increased by over 10 per cent since 
the 1970 edition. Since American 
corporations’ foreign investment is 
estimated to have risen by over 
15 per cent in 1970 and 1971, and 
their manufacturing investment by 
over 25 per cent a year, the range of 
their aggregate holding, is of increas- 
ing importance, even though many 
subsidiaries have been set up for tax 
purposes. 

Antiques catalogue 

Ei^lish Snuff-boxes by G. Bernard 
Hughes (MacGibbon and Kee, £2.95). 
Snuffing, or .snushing as it was known 
colloquiidly, became an important 
social accomplishment in the 
eighteenth century and some resplen- 
dent examples of snuff-boxes were 
made in silver and gold set with 
predious stones. Rare examples will 
now fetch £4,000 or more — some over 
£25,000. Even factory-made silvei 
boxes of collectors’ quality are hard 
to find below £25 and may be in the 
£50- £150 range. On the other hand, 
agate snuff-'boxes may still, if you 
are lucky, be bought for a few 
sHillings. Mr Hi^hes has written 
an excellent and helpfully illustrated 
history of snuff-boxes (and snuff- 
taking, too) in matenals ranging from 
the relatively cheap pewter and horn 
to the most highly decorated and 
expensive ones. Incidentally, he tells us 
that snuff-boxes were the first articles 
to be made commercially in Sheffield 
{date. 

The British Antiques Yearlmk, 
1971-72 compiled by Philip Wilson 
and Marcelle d’Argy Smith (Antique 
Yearbooks, £3) . Do you want to know 



German enema/ snush-box 


where to buy silver or where to have 
your pictures restored, which regular 
journals to read about antiques or 
what recent books have appealed 
about jewellery ? These are some of 
the questions answered in tl s book. 
Essential to dealers, it is also invaluable 
to amateurs, particularly those who 
travel around the countryside and want 
to know who is where. 

Victorianaby Jean Latham \ Frederick 
Muller, £3.20). A scrapbook a very 
little about many kinds of bric-a-brac, 
from dolls’ houses to fashion plates, 
pm boxes to paperweights, and a 
mention of more notable oddities like 
stevengraphs. Not for the serious 
collector, but may be useful to a 
magpie mind seeking new collecting 
ideas. 

THE MINORITY RIGHTS 
GROTS REPORTS: 

'valuable’' 

• RELIGIONS IN THE SOVIET UNION 
— ' systematically documented and 
unemotionally analysed ' ; ’ telling '* 

• THE TWO IRELANDS 

— 'a rare accuracy and insight'*, 

‘ lucid . without bias '* 

• JAPANESE OUTCASTES 

— 'sad and atrange story a 
fnghtening picture '* 

• EAST AFRICAN ASIANS 

— the most comprehensive docu- 
ment on this still important sub- 
ject '* 

• SOUTHERN SUDAN AND 
ERITREA 

* clear, concise and balanced '* ‘ a 
detailed analysis of a forgotten 
war '*. 

• THE CRIMEAN TATARS AND 
VOLGA GERMANS 

— ' bnlliant ' a great accuracy and 

detail '* 

and, just published 

• THE POSITION OF BLACK 
PEOPLE IN BRAZIL 

price 30 p (plus Sp UK; 8 p overseas 

post & p.) each from ; 

MRG, 3i CRAVEN ST, LONDON WC2 

^The Intarnttionalist , VJaw Sociaty , *Balfaat 

Nawalattar , *iriih Post , ^Sunday Indapan* 

dam , ^ha Fnand , African Standard : 

"SMnday Timaa 


50 


f 


tH% 




World bourses in 1972 


It' 

V »Pk / 

> V 



Who, at the beginning of 1971, 
'would have ranked London the 
year's star stock market ? It 
managed a rise of 42%, fol- 
lowed by Japan’s 34% and 
Sweden’s 24%. The luonomist 
for one certainly got it wrong 
We plumped for Wall Street, 
and the Dow Jones managed 
only 8%. The year before we 
had tipped it as the chief fall 
guy and it turned out to be 
the star performer Wc‘ 11 , third 
time lucky Wc reckon that 
Wall Street will come out the 


back to health, happiness and 
fuller employment. Sometimes 
the gloom hits the market first 
and hardest, as in Germany, 
where the banks run the market, 
the companies quoted on the 
market, and the accounts of 
those who invest on the market 
— which means the spread of 
glum information to glum prices 
IS fast and furious 

The third law is that 
insiitntirmal factors make a 
ditfcrence. Belgium is worried 
about its economy but so long 



Ifs all happening in Wall Street 

17%, Japan i8®i, Australia 
I3?i and South Africa 17%. 
Meanwhile New York was 
delighted by phase 1, worried 
over phase 2, and then exulted 
over currency realignment, and 
London ploughed on and up 


takeover bids and small inves* 
tors chasiiiig tips. 

However, there arc those who 
reckon that the bull will con- 
tinue to run on They argue that 
the pricc/earnings ratio on the 
500-sharc index is only 18.7, 


1972 winner. 

it ull confirms the first law of 
stork inarkel prediction* the 
longfi the tunc span the wronger 
the forecast We held oui good 
pro.sprcl.s in 1971 foi Germany: 
the German market touched a 
foul -year low. We said South 
African shares were looking 
cheap on a two- or three-year 
view: they are now' looking 
cheaper still. On Japan, wc 
hedged our bets by describing 
It a.s “ an unknown quantity.” 
And insmitablc it turned out, 
ending the year second to 
London after a brief panic in 
August whkh made no sort of 
market sense 


as the main companies go on 
paying out dividends the 
myriads of small shareholders 
keep their faith in the market, 
and the handful of giant hold- 
ing companies never lose it in 
the first place. Italy, on the 
other hand, no longer seems to 
believe in miracles by private 
enterprise, and the Bastogi 
affair— when the first open 
takeover bid for years was 
thwarted by money-power- 
poliiics — proved to the world at 
large that the market was tight, 

( losed, thin and manipulated. 
It IS now at the lowest level for 
years 

The fourth Jaw is that 


regardless. But now that the 
stockbrokers, investors, bankers, 
companies and speculators have 
got their certainty of parities, 
do they have any certainty of 
where their markets are 
heading ? 

London 

On the ground that what goes 
up must come down, London 
looks the most precarious mar- 
ket of the lot. The broadly 
based Financial Times- Actuarivs 
all-share index is now near its 
all-time high, and the FT 
industrial index of 30 shares is 
only 9% off the peak level of 


compared with 22.8 at the peak 
of the last bull market ; that 
Wall Street is due for a rise and 
w'ill comfort the optimists ; that 
gilt-edged securities, after a 
hiccup, arc still rising, bring- 
ing down interest rates and thus 
increasing the relative attractive- 
ness of equity yields ; that 
money supply, so far as can be 
judged, IS still increasing ; and 
that companies are reporting 
substantial profit increases, with 
further recovery from the 
heaviei end of industry still to 
come. 

We reckon that the bull 
market might just make it to 
the budget, but will then 


The second law' of market currency uncertainties upset 
lorccasting says that the everybody’s applecart. Markets 
relationship between slock mar- did not like the uncertainty 
ket pcrfoimancc and underlying floating entailed, and after 
economk conditions varies dis- August I5lh all except Wall 
conceriingly Sometimes, as in Strett and London dropped, 
I.<ondon (and, ui an extent, reachine their lows during 
Sweden), an eronomu depres- October and November Holland 
.sion signals only one thing: that had the largest fall, with 23% ; 
it has to end, and be reflated J rance was down 21 %, Germany 


the last bull market, reached become increasingly nervous 
in September, 1968. The about inflation and the timing 
removal of .short-term capital of the next stop ” of the cycle, 
gams tax has helped business. After all, the market has been 
The two indices have risen by anticipating the economic 
43% and 42% since January recovery through a year of stag- 
Tst. All the symptoms of a late nant output and huge uncmploy- 
bull market are theie : huge ment, and is quite capable of 
oversubscriptions for flotations imagining such horrors as 
of tiddly companies, a flurry of freezes and squeezes while th(* 




ivK watmcmm itMuaet t, 


BUSIMSSS BMOtP 


5 » 


indieaton flMh green. Whether 
the nuihet then falls, or stays 
on a plateau, depends to a large 
extent on Wall Street. 

New York and others 

The New York market i$ 
entering the new year on an 
upbeat note, pleased by the 
currency settlement and the 
strengthening economy Yet 
many analysts are still wary 
of predicting a real boom while 
income and price controls 
remain in effect. And nearly 
everybody expects phase 2 to 
continue at least through the 
coniing year, though some 
cynics predict a dismantling of 
the incomes policy some time 
before the November election 

The consensus in Wall Street 
IS that the Dow Jones may not 
go much above the 920-950 
range, even if the economy 
recovers visibly over the next 
few months Brokers reckon that 
the recent 10% gam was too 
steep to be continued at the 
same rate Technical factors 
would normally favour some 
buoyancy in the early weeks of 
the year followed by a slow- 
down just before the federal 
income tax payment date, April 
15th, But the heavy inflow of 
foreign funds expected when 
the American economy picks up 
could produce a stronger and 
more protracted rally than 
these technicalities would 
normally allow. 

There is not much chance of 
foreign portfolio money flooding 
into Australia. Certainly the 
currency settlement has given 
an end-year lift to Australian 
share prices after months of 
gloom, but it would take an 
optimist to expect this to go 
on much longer. The heavy- 
weight miners of non-ferrous 
metals will have to wait on a 
substantial increase in world 
commodity prices to attract 
much stodc market attention. 
The rises in December were on 


quite small turnovers, and 
apparently caused as much by 
London traders covering short 
positions as by genuine interest 
The iron ore and coal com- 
jMnies cannot be assessed until 
Japan’s trading position with its 
revalued currency becomes 
clearer. Many of them have 
contracts in American dollars 
against which the Australian 
dollar has been devalued Tliis 
handicap must seriously curb 
their profit growth, and hence 
their attractiveness to investors 
Only in industrials does there 
seem much scope for gains, and 
even there these will be largely 
confined to takeover situations 

But the coming year will at 
least see the introduction of 
Commonwealth government 
controls over the securities 
industry. The senate committee 
—which did a good eye-opening 
job on malpractices during the 
boom years — ^will recommend a 
federal regulatory body for 
which the prime minister, Mr 
McMahon, has said he will 
introduce the necessary legisla- 
tion. This should help to under- 
pin investors* confidence which 
has been badly damaged by the 
scandals about small exploration 
companies Many of these are 
likely to go under in 1972 for 
lack of capital 

And what about Japan ? I'he 
Tokyo market had no immediate 
fears. Exports only make up 
10% of gnp — the main 
worry now is how efficiently 
resources can be switched from 
sophisticated exports to domestic 
social output (eg, clean air, 
housing). The growth rate oi 
gnp will be below Japan’s usual 
rate But the indications arc 
that in the first part of 1972 the 
market will continue to zoom 
up. Foreign investors have not 
pulled out. Money is easy and 
investors — or rather speculators 
— are going all out. But the 
unhealthy side of Tokyo is 
already in evidence. In each 


ERMANY 

HOLLAMO 

ITALY 

SWEDEN 260 

A 

•A 

Mil 

200 

1 160 

iA- 


MSmonMoiH 

«MB « 71 

so 

iSas as 71 1 


Koy to the world bourses key indicator 
This week's position 


Stock price indices Percentage change on 




1971 


ona 

ona 

ona 

rarord 


Oac 29 

high 

low 

waak 

month 

yoat 

high 

London 

474 0 

474 0 

305 3 

. + 25 

+ 99 

+381 

- 92 

Now York 

893 7 

9508 

798 0 

+ 10 

+ 56 

+ 62 

-102 

Conada 

187 8 

189 9 

162 6 

- 06 

+ 96 

•4 60 

- 91 

Auatralia 

501 2 

518 5 

405 0 

+ 35 

+ 17 7 

- 26 

-24 6 

Japan 

199 5 

208 2 

148 3 

+ 39 

+ 7b 

+ 34 4 

- 42 

Hong Kong 

336 5 

406 3 

201 1 

+ 11 2 

+ 182 

+ 69 0 

-172 

BalgTum 

965 

106 7 

907 

+ 02 

+ 1 6 

+ 50 

-10 1 

Franca 

67 0 

79 2 

61 6 

+ 04 

+ 04 

-101 

-22 2 

Garmany 

97 6 

112 7 

87 6 

+ 02 

+ 39 

+ 41 

”30 4 

Holland 

104 4 

128 0 

93 0 

+ 1 2 

+ 49 

- 76 

-220 

Italy 

47 0 

601 

440 

- 08 

+ 47 

-174 

-69 7 

Swadan 

302 9 

307 7 

245 7 

- 06 

+ 09 

+23 3 

-19 3 


Stock prreet and yiatdi on pagas B1 and 62 

Each week The Economist publishes this general round-up of 
how the world's stock markets are doing The table is compiled 
from a wide selection of sources, some coming to us direct 
from the stock exchanges (Montreal. Tokyo. Hongkong. Sydney, 
Pans, Brussels) ; others coming from newspapei groups 
(Financial Times, Dow Jones and Company which owns the 
Wall Street Journal, and 11 Sole) , one from a bank (Herstatt in 
Cologne. Germany) , one from a stockbroker (Jacobson & 
Ponsbach. Sweden) . and one from a national bureau of 
statistics (Holland) 

This week sees the addition of a new country index, the 
Hang Seng index of the Hongkong stock exchange, named after 
the bank that started doing it in 1964 before the exchange took 
over in 1969 Hongkong has become an increasingly important 
market in the past few years But another key indicator— The 
Economist unit trust index — bows out because we feel it was 


not sufficiently broadly based 


Number of 




constituent 

Country 

Bata data 

Sourca and nama 

companies 

Britain 

July 1 1935 

Financial Timas 

Industrial ordinary 

30 

Unitad Stataa 

Cctobar 1, 1928 

Dow Jonas induatnal 
Bvaraga of tha NYSE 

30 

Canada 

1959 

Montraal stock axchanga 
induatnal indax 

65 

Auatralia 

Japan 

1936-39 

January 4, 1968 

Sydnay stock axchanga 
Tokyo now stock 
axchanga mdax 

174 

751 

Hongkong 

July 31, 1964 

Hang Sang rndax of tha 
Hongkong stock axchanga 

33 

Balgium 

Dacambar31 1963 

Belgian general stock 
index (Brusiala bourse) 

90 

Franca 

1961 

Pans bourse committaa 

236 

Garmany 

Dacambar 31, 1959 

Haratatt mdax 
for Frankfurt 

100 

Holland 

1963 

Algamaan Nadartandae 
Parsburaau (central 
bureau of atatiatica) 
Amatardam industrial 

average 

54 

Italy 

Dacambar 29 1956 

It Sola, 24 Ora (Milan) 
Jacobson & Ponabach 

50 

Swadan 

January 2 1962 

30 


of the past seven years the 
market has hit a new high — ^but 
1972 could prove to be the 
eight-year hitch 
Back in continental Europe, 
the bourse outlook is bleak in 
Italy, slightly less so in Holland, 
Belgium and Germany, and most 
hopeful in France— where 1971 
has been a miserable vear. All 
these bourses have a lot of 
ground to make up before 
investor confidence in equities is 
restored, and most of them 
suffer anyway from attitudes 
towards tax, rides and savings 
which make the cult of the 
equity a minority one. At 
least France is thinking seriously 
about modemising its market 
following the Baumgartner 
report on stock market reform, 
and will probably have the 


benefit of faster economic growth 
than the others 

When it comes to choosing 
the bourse of the next year, New 
York IS the obvious candidate. 
The potential for growth m an 
election year is vast , the depth 
and breadth of the market is 
a magnet to foreign investors 
(and there is an outside chance 
of reforms which would allow 
them to buy domestic mutual 
funds without paying domestic 
taxes this year) And none of 
the other bourses look like 
strong competitors for their 
funds. So this year we are not 
going to tempt fate by propof 
sing the runners-up, but will 
put all our eggs in one basket. 
Then, if Wall Street does 
glitter, some of the sparide will 
rub off on the others. 



5a 


TUB 



blhe fastest shewoncarih 


Over earth, in fact. The fastest way ^ working with Early Bird. Now Intelsat 

to put the show on the road is by | ^ satellites, fed from our strategic- 

space TV. Live television pro- i ally placed earth stations, link 

grammes bounced around the a. people almost everywhere on 
globe by space satellites hover- Ipy Ifjfi earth (and on the moon), 

ing 22,300 miles overhead. You iA From cables under the sea, to 

see it as it happens, even when it Ih w satellites in space, our interna- 

happens on the other side of the \ ^ tional business is still the same- 

world. There are telecine facilities ^ \ bringing people together. We en- 

for film and tape. too. which permit^' >8Br gineer and operate global systems 

sound commentary to be added as the bringing you both experience and 

show goes on. We were in at the start, services to match your needs. 



The Cable and Wireless Group of 
Companies and Associates with’ 
offices throughout the world. . 


THE BI6 LINK 


Head Office ; Mercury House, 
Theobalds Road. London WCT, 


' to^l^ ' r« 


53 


BUSINESS 


OUTLOOK 



The year of the Anglo-Saxons 

Both America and Britain seem to be moving into their highest growth 
rates for a long time, while Japan and most of continental Europe 
should expect a below-average 1 972 


The new year may not go down as a vintage one for 
world economic growth. But it should certainly be better 
v'han 1971, for one predominant reason. The American 
economy looks like doubling its forward pace ; and since 
America still accounts for nearly half of the world’s 
industrial output, this means that world economic growth 
could ibe half as fast again as in 1971. Our general fore- 
cast is that the combined real gross domestic products 
of the main industrial countries could increase by 5 or 
5^ per cent in volume, after a rise of 3 J per cent in 1971. 

But, even more than usually, the general trend will 
conceal more than it reveals. Only four major countries— 
America, Canada, France and, at long last, Britain — are 
likely to see output growing at a pace near or above their 
’'underlying growth in capacity. Japan and Germany still 
face increased margins of slack. Fortunately, both of 
them have cut their bank rates in the last fortnight of 
the old year, but their reflations may take some time to 
work through. At least in the first half of 1972 Japan’s 
growth is likely again to be down to near-European 
standards. And the combination of a still fonnidably 
competitive D-mark and a sluggish domestic economy will 
ilampen the prospects for Germany’s close trading 
partners: smaller continental countries are unlikely to 
sec much acceleration in their growth rates umil after 
midsummer. Italy remains a special problem chiid, and 
we hesitate to make any estimate of its growth rate ; 
• hut it will not be spectacular and it could 1% near to nil. 
France should again have the highest growth rate in 


Guessing the figuring 

Annual parcantaga changaa in raal gnp 






(Esti- 


^United States 

ii 

1970 

mates*) 

1971 

(Forecasts) 

1972 

4.5 

- 0.7 

3 

6 

Britaint 

3.1 

2.2 

n 

5 

Canada 

4.8 

3.3 

51 

6 

Japan 

11.2 

10.7 

4} 

6-7 

Germany 

5.1 

6.4 


2 

francat 

5.7 

5.9 

54 

5 

Italy 

5.7 

5.2 

i 

? 

Netherlands 

5.3 

6.0 

5 

21 

Belgium 

4.7 

6.1 

3} 

3 

Other OECD 

5.4 

5.4 

4 

4* 

EEC 

6.4 

5.6 

3f 

31 

’ Tataf OECD 

5.4 

2.7 

3i 

5-51 

'hytheDico tfiee 



I'll win, make no mistake about that 


the common market, although this time it is not expected 
to beat the top rate [nr the western world, as it has 
tended to do in the past. 

Obviously, all bets must be hedged. Nobody can .say 
with confidence that America's growth rate will not be 
a little less, or (more likely) a little more, than 6 per 
cent. A year ago we forecast that its rate in 1 97 1 would 
be about 4 per cent, but might be 3 or 5 per cent instead. 
In fact, it scored at the lower end of our range. But if 
our guesses (helped by the forecasts for the first half of 
1972 released this week by the Organi.sation for 
Economic Go-operation and Development) prove to be 
anywhere near the mark, then this will be the year of the 
Anglo-Saxons. For once, and no doubt amid pointed 
reminders from si>me British opponents of British entry, 
the six countries of the present EEC look set as a group 
to achieve a slower growth than the rest of the 
industrialised world. 

Nowhere will buoyant businessmen be leading the 
upswing with lavish outlays on new plant and equipment 
to meet a new era. Private investment is likely to remain 
weak until late in 1972, although housing may recover 
in France and Italy and continue to expand in Britain. 
In most countries the major drive will come from con- 
sumer demand and government expenditure, accom- 
panied by a reversal of the rundown in stocks which was 
so much a feature of 197 1 (and which in several countries 
has already gone unusually far). 

The uneven growth pattern affects the forecasts for. 
trade, and especially its distribution. Before the Wadiing- 




54 


BUSINESS OUTLOOK ’73 


tm momwn jAmAiar i| 197s 


ton accord on exchange rates, the OECD forecasteis 
reckoned that the annual rate of growth in the volume 
of exports from the big industrialised countries might 
rebound from 4 per cent in 1971 to 5I per cent in the 
first half of 1972 — a rate still far below the 9.6 per cem 
in 1970. One bull point for 1972 is that the reserve 
position of primary producing countries has remained 
relatively healthy. But the recovery in trade is not likely 
to be spectacular. Although the United States will be the 
spearhead to fa.ster growth in the industrialised world, it 
accounts for not quite a* fifth of its external trade ; m 
1970, it took just 16 per rent of the exports of its trading 
partners in the rich men’.s club. A very desirable initiative 
by the big industrial countries now would lx* a call for 
a new Kennedy-round type of trade negotiations, aimed 
at eliminating all tariffs and quotas on manufactured 
goods and raw materiaLs over a ten-year pciiod. This is 
one of the retommendations of a private Ameritan- 
Japanese-European group of economic experts that 
assembled just before Christmas at Washington’s Brook- 
ings Institution. Another of their recommendaitions is that 
small and more frequent changes in currency par values 
should be a central feature of all countries’ economic 
policies from now on. 

Clearly the retuiT to .so-called stable exchange 
rates will not mean a letum to anything approaching an 
underlying payments r-quilibrium in 1972. The main 
reason Is the simple fact that the key countries will remain 
out of step in their domestic business cycles ; but evident 
mistakes in .setting the pattern of the new central parities 
may help to add «ui extra twist of their own. Germany 
and Japan will probably pile up further .substantial surp- 
luses on cunent account in 1972 ; Japan’s .surplus is 
likely to be running at a rate of over $ i billion a quarter. 
To the extent that these current surpluses feed back into 
faster domestic growth in each country, and the payments 
strain is borne by the United States, this could be shrugged 
off, even welcomed While the dollar remains inconvertible 
(be it at $31) or $38 an ounce against gold), a continuing 

and presumably temporary — deficit on its current 
account should hardly upset Washington ; in any case, 
as we argue below, any continuing los.scs on tiade may 
be more than offset by a reflux of short-tejrm capital to 
America. But if these German and Japanese surpluses 
carry over into 1973 and beyond, there is a danger that 
the strain of them will weigh lucreavingly heavily on their 
weaker trading partners, such a.s Britain and perhaps 
France, Sterling could then c"me under considerable 
pressure, and it Ls to be hojrcd that Mr Barber would 
quickly unpeg its rate. 

In Japan, policy may be deliberately geared to coming 
to terms with a world tliat has made it so painfully dear 
over the past year that thcie .ire ouLsudc limits to export- 
led growth ; and Japanese' planners have a way of 
getting thcii message across to their buancss partners 
that is rightly the envy of other countries. But in Germany, 
where it now kx)ks as if the authorities in Bonn will let 
the exchange rate do some of the work that might other- 
wise have been borne by quicker and more full-blooded 
domestic re^ationary policies, the mark may become 
unbearably strong. 



She's a Democrat, of course 


However, the immediate danger on the payments front 
for 1972 is probably not that large shifts in trade flows 
will upset the economic calculations of America’s trading 
partners. It is that a massive return to New York of the 
short-term capital, which fled to European capitals and 
Tokyo last year, could wreak havoc with reserve positions, 
put untimely upward pressures on domestic interest rates 
in Europe and Japan (while rates in the Eurodollar 
market are expected to fall), and result in a spectacular 
disappearance of international liquidity. The overhang 
of potentially mobile funds Ls huge. One respected private 
research institute in Japan is brash enough to estimate 
that the Bank of Japan alone could lose $3 billion to 
$4 billion in reserves, despite a massive current surplus. 
Japan could afford such a loss. Britain could not. 

No such reflux of funds to America has started yet. 
True, many of the major currencies were at or near their 
new dollar floors this week. 7 'he Bank of r.nginnd and the 
Bank of Italy were having to sell dollars ; the Bundesbank 
was probably doing so too, hut to hold the mark | per 
cent above its floor, not right down on it. So far, the 
exchange markets have been dominated by year-end 
influences, and the volume of transactions has not been 
unduly heavy. In January, the winds could begin to 
blow. 

The threat should not be overstated. The speculators 
of yesterday can afford to act as investors today ; they 
can afford to wait. The incentive to shift will be there : 
the dollar now looks safe, and America’s economic pros- 
pects arc better than anyone elsc’s. This may push 
up interest rates in New York, while rates fall in Europe 
and Japan. But wider margins of fluctuation around the 
new central currency rates — 'inadequate though they may 
be — will make the fine calculations more risky. The reflux 
of lutuLs to America, when it comes, ought not to be 
beyond the ingenuity of central bankers to cope with. 
But we are pr^ably going to move into a period where 
there will be sudden screams about a dollar shortage, 
after a long period of growls about a dollar glut. 


niB woomtMm ptuDmaet i, 


BtfSMtSS OUTLOOK ’7a 


55 


OUTLOOK 

72 


Can Britain grow? 

Our views of Britain's prospects. For 1972 they are bright, except for fixed 
investment. Mr Barber may be right to give up to £900 million of tax reliefs 


When we wrote this oudook a year 
ago, a lot of our underlying assump* 
tions about the British economy were 
very wrong. And yet once again, as 
table I shows, our only tabular guesses 
in that survey have proved to be pretty 
well right. 

Column one of table i shows the 
latest calculations, in the November 
issue of the Review of the National 
Institute of Economic and Social 
Research, of percentage changes in the 
main components of Britain’s gross 
domestic product between the last 
quarters of 1970 and 1971. Column two 
shows the guesses that we made in this 
annual “ outlodc ” a year ago. It will 
be seen that the NIESR still believes 
that growth in gdp has been very 
slightly lower than we then forecast, 


1 — Guesses at Britain's outturn in 
1971 



NIESR's 

latest 

estimate of 

The 


7o growth 

Economises 


end-1970 to 

guess a 

GDP 

end-1971 

year ago 

4 20 

+2i 

Consumption 

4-40 

f4 

Public authorities' 
current 
spending 

4-23 

+2* 

Fixed investment 

403 

4-1 

Exports 

4-44 

43 


but mainly because Hxed investment 
has been even lower than we had 
expected (although our forecasts at 
that time were the gloomiest around) 
The other depressant influence on pro- 
duction in late 1971 has been a drop 
in stockbuilding that is probably equal 
to over i per cent of gdp this is 
a very temporary — and in our view 
unforecastable — depressant, so we do 
not now put it in these tables. Over 
most of 1971, ex]x>rts did rather better 
than we expected a year ago ; they 
were greatly helped by the way in 
which west Germany led the world 
into floating exchange rates last May. 

In general, however, the outturns in 
table I are nearer (o our forecast 
figures than we remotely deserved. 
Which brings us to what might be 
called Oateh 1971, and to the crafty 
trade secret of the forecasting profes- 
sion. 

Our forecasts last year were based 
on the assumption that Britain should 
reach aibout a af per cent growth in 


even if Mr Barber undertook no 
further reilationary action. The Gov- 
ernment at that time thought that 
Britain should get an even higher 
growth rale than 2| per cent even 
without any further reflation. 

In the first half of 1971 it became 
quite apparent that Britain’s produc- 
tion was falling well below what we 
had been expecting, and therefore even 
further below what the Government 
had been expecting. In his budget, 
mini-budget and other special public 
handouts, Mr Barber has therefore 
poured extra spending power into the 
economy, equal to something like 2 per 
cent of gdp, mostly concentrated on 
consumption. 

Always slightly underestimate 

The cunning trade secret for fore- 
casters IS, therefore, tha*- if you pitch 
a forecast slightly on the pessimistic 
side of what the Government is cur- 
rently expecting, you have two charces 
of being right. They ailse because the 
outturn of the British economy is nowa- 
days generally either slightly more 
stagnationist than the Treasury expects 
or else much more stagnationist. . 4 nd * 

(a) If the outturn is only slightly 
more stagnationist, your slightly more 
stagnationist forecast proves right on 
its own account ; 

(b) If the outturn is much more stag- 
nationist, the Government pours m 
sufficient icflationary measures m 
order to get part way (but only part 
way) back to its original target, and 
this again causes your only slightly 
more stagnationist forecast to prove 
right. 

The main misfortune that can queer 
this usually easy pitch for forecasters 
is in the years when the Government 
runs scared about the balance of pay* 
ments. In those years the Chancellor 
does not dare to reflate the internal 
economy, so that there can be a very 
stagnationist (instead of only a mildly 
stagnationist) outturn for Britain's 
gross domestic product. 

In 1972 we expect the Government’s 
unhappy repegging of sterling’s 
exchange rate, at a slightly overvalued 
level, to cause a deterioration m the 
balance of payments. But we do not 
think that this will stop the Govern- 
ment ‘‘going for growth,’* albeit per- 


haps slightly less successfully than it 
would like. Indeed, our guess is that 
Mr Barber will aim in his budget 
next March for a growth in real 
gdp of somewhere around 5 per cent 
between the last quarters of 1971 and 
1972. We also believe that this will 
be economically the right target for 
him to aim at. There is a lot of slack 
m the economy, and excessive unem- 
ployment could most efhcier'^^ly be 
mopped up by going for 5 per cent 
annual gn>wt!h lor each of the next 
three years, up to the end of 1974 

Soothsaying for 1972 
However, our guess is that actual 
growth in 1972 will again fall slightly 
below the Chancellors 5 pci cent 
target . thus once more bringing 
undeserved kudos to those of us who 
make use of tlie forecasters’ crafty 
trade secret. One subsidiary reason for 
some expectation of lag is that 
monetar^^ pohev mav be, almost sub- 
consciously, too dcflationarv m the 
early months of 1972, because the 
Bank of England may feel that it needs 
to bolstei sterling's new rate 

The final column of table 2, there- 
fore, sets down our two-way-covered 
guess at what inav be the percentage 
movements in the mam components 
of real gdp between October and 
December of 1971 and October and 
December of 1972. It mav be said that 
there is now no economic value in a 
guess of this kind, even if it docs — 
after budgets, mmi-budgets and other 
changes of government course— again 
cventuallv come out as nearl\ right as 
did the guesses set out in table i. But 
this sort of macio-econonnc “ fore- 
casting ” does provide some pointers, 


2 — Guesses at real growth in 1972 



NIESR's 

latest 

forecast 

of 

7o growth 
between 

The 


end-1971 

Economises 


and end- 

guess for 


1972 

the period 

Gross domestic 

product 

4-3 2 

+44 

Consumption 

4-36 

4-51 

Government 

current 

spending 

4-2.3 

+21 

Fixed investment 

4-3.7 

+3 

Exports 

+2 9 

+31 



S6 


BtrSllfU$ irniMOL 


of whidi we think that British businesfil 
should take more account. 

First, for the planning of taints for 
individual firms. In addition to a rise 
of around 4^ per cent in real gdp 
between end-1971 and end-1972, we 
are expecting a rise of around 5 per 
cent in the general price index known 
as the *‘gdp deflator.** Between end- 
1971 and 1972, it is quite possible that 
Britain*s gross national income in 
money terms may therefore rise by 
around 10 per cent : say, from an 
annual rate of about £51 billion now 
to about £56 billion in the last quarter 
of 1972. For 1972 as a whole the rise 
in money gross national product over 
1971 as a whole should be more than 
10 per cent, say from about £48 
billion to about £54 billion. 

One lesson from this is that any 
British business which does not increase 
its turnover by more than 10 per cent 
in 1972 should feel dissatisfied. It 
should feel that it is falling behind its 
competitors in the race. Too few 
British businessmen set themselves 
realistically stern miniinum targets of 
this kind. l*hat is one reason for our 
slow growth. 

Secondly, table 2 may throw some 
light on the budget prospect. The first 
column of the table shows the fore- 
cast made in the November issue of 
the NIESR Review for movements in 
real gdp and its components between 
the last quarters of 1971 and 1972, 
on the assumption of no change in 
economic policy. It will be seen tliat 
the NIESR would then forecast a rise 
of only 3.2 per cent in gdp in that 
period. This is lower than the Govern- 
ment is at present expecting (or than 
we ourselves would have guessed) ; 
but lx)th the NIESR and Government 


reach their estimates by using detailed 
foreoasiting equations, and the blunt 
truth is that the NIESR’s equations 
haivc proved better than the Govern- 
ment’s in the past few years. If the 
NIESR is right this 'time, then the 
impl'i'caition seems to be that a 
Chancellor who aimed for 5 per cent 
growth could inject up to i.S per 
cent of gdp (or around £900 million 
of new demand) into the economy in 
his next budget. We do not expect 
him to cut taxes by quite that amount, 
but the probability of some tax reduc- 
tions is again apparent. Even if there 
are £500 million of tax cuts in March, 
we do not expect unemployment to fall 
by much in 1972 (see the following 
article). Now that the opportunity to 
cut Bank rate has been thrown away 
by the repegging of sterling, we would 
be marginally in favour of some cuts 
in purchase tax in January. 

The next crisis 

Thirdly, these forecasts may serve as 
a signpost to the -timing of Britain’s 
next economic “ crisis.” Two estimates 
that we have omitted in table 2 are 
those for stockbuilding (which we 
expect to rise, thus adding to the 
demand that should spur a rising gdp) 
and imports (which we also expect to 
rise, thus moderating the rise in gdp 
because some part of rising demand 
will be met by these new supplies 
from abroad). However, in table 2 we 
are still assuming a deplorably low 
rise for fixed investment between now 
and end- 1972. At some time in the 
future fixed investment will take off, 
motivated at last by the consumer 
tooins that Mr Barber has been 
stoking. 

At that moment Mr Barber will have 


to stop malting further reduotiDn« in 
taxation, and he might be faced by a 
balance of payments crisis. In an 
investment boom, there is a real danger 
that imports of foreign madiincry 
might rise extravagantly : because 
Briitain’s long investment slump, which 
was an inevitable consequence of the 
Labour government’s war against 
profi'ts, means that Britain’s capital 
goods industries are in poor shape to 
provide a sudden rise in output of the 
most modem sorts of machines. 

It is just possible that this invest- 
ment-cum-import boom will start 
before the end of 1972, but at present 
we would regard the financial year 
1973-74 as more likely. Britain will 
be entering the European Economic 
Community from January i, 1973. 
The Economist disbelieves the common 
forecasts that entry into EEC will hurt 
Britain’s balance of payments. These 
forecasts have always seemed to us -to 
be drawn up by people who wrongly 
regard written statements of non- 
fulfillable European agricultural in- 
tent as ” definite quantities ” which 
they then write into their equations, 
but who treat the far more important 
forces in the marketplace as ” unquan- 
tifiable ” and therefore leave them out. 
However, it does now look as if 1973- 
74 — the period of actual entry to EEC 
— may be a bad period for Britain’s ^ 
balance of payments. ^ 

This is partly because Britain re- 
turned at Christmas of 1971 to the 
wrong exchange rate and partly 
because of the stage of the trade cycle 
that may be due then. The saving 
grace for this country would be if there 
was a return to floating exchange 
rates before mid- 1973, especially if it 
was again led by west Germany. 


OUTLOOK 

72 


Industry gets its chance 

Much of British industiy is in a bullish mood, but still awaiting overdue 
government policy decisions. The new year promises better for 
labour relations, but little comfort for the unemployed 


Oil and automobiles are the two most 
confident pnvate industries in 
Britain today. Oil’-s happy new 
year is rooted in the North 
Sea. Our first forecast for 1972 
is that, quite early in the year, there 
will be confirmation of the geologists’ 
estimates that Britain’s offshore seas 
may contain more submarine oil than 
any cabinet minister or oil company 
chairman will yet commit himself to 
in public. 

When details of the Sbell/£sso 
“ Auk *’ oilfield, some 180 niSes off 


Aberdeen, are announced in January, 
it will be seen that a minimum of 30 
per cent of Britain’s present oil con* 
.sumption (100 million tons) should be 
lopped off the country’s oil imports 
by >975- 

For the same reason, the happiest 
nationalised industry today is the 
gas industry, which has doubled its 
sales since North Sea gas was discov- 
ered in 1965. In mid- 1972 it should 
manage to link up its Viking field, 
giving it five major North Sea fields 
tied to its national grid. 


The car industry, still by far 
Britain’s biggest exporter, ranains 
ekted with the way that Mr Anthony 
Bather’s mini-budeet has uncorked an 
apparently unending demand for new 
cars. A rerord home market sale ol 1.4 
million n^ oars during 1973 is now 
confidently forecast by die carmakers, 
which is 200,000 units more than ever 
before. But British factories wili make 
their diare of these with, if anything, 
fewer workers than they employ^ last 
year. ' 

The desire of malar nmlhrfat^lilirers | 



57 



to piotect themselves ffom strikes in 
the cornponem iiKiustry^ thnmgh 
muM-eowdng of supply^ may mean 
that more of their subcontract work 
will go overseas. The prospect for car 
exports is not rosy. Gom^nies sudh 
as Ford are planning their long-tenn 
overseas sales campaigns on the 
assuxn^on that, wherever there is a 
sizeable market for cars or trucks, 
national pressures will eventuailiy force 
local assembly. So 1972 is likely to see 
a fa'll in the numib^r of assembled 
vehidles being exported from Britain, 
but a growth in the exports of com- 
ponents and partly-bui'lt veh'icles. 

Decisions on file 

A tiresome logjam of decisions has 
now been built up wWidii the all- 
enubracing Department of Trade and 
Industry. Among the files currently in 
Mr John Davies’s pending tray are 
those requiring a decision on the 
Government’s policy towards ; com- 
petition and monopoUes ; changes in 
industrial law before common market 
entry ; the steel industry’s future ; 
nuclear power stations ; and, as always, 
(Concorde. Some further back-pedalling 
is to be expected in order to bale out 
yet more lame ducks. The Govern- 
ment is likely to give further support 
to the shipbuilding industry, despite 
its previous desire not to do so. British 
-Hand other European — shipbuilders 
face a critical year ; the currency 
realignment has given them a price 
advantage, but since Japanese yards 
have full order books up to 1974-75 
the cfFeOt will not l>e immediate 

The British Steel Corporation, with 
a drop in production of ic per cent 
in 1971, has done no worse (and no 
lietter) Uian its foreign competitors. It 
I's waiting to be helped out in lilts 
lame duokery by »the so-called deep- 
seated review, which is due by 
February ; depressingly, the Govern- 
mem has already acceded that BSC 


OUYLOOIt ^79 

'win run another loss of £100 nuNion 
in the financial year 1972-73. Among 
the uaers of 9 teel in 1972, ihe hamd- 
pressed process plantmakers face 
further downward revisions in the 
chemical industry’s spending plans ; 
but there should be some work from 
the North Sea oil bonanza, for pro- 
duction platforms and the like. As 
BSC brings its new oxygen steelmaking 
plant on stream at Cackenby, k is 
possible that Britain will regain some 
of the orders for natural gas transmis- 
sion papes w'hich were lost earlier in 
1971 to Italy and Japan. There should 
also be some upturn in demand for the 
constructior^ steelwork sector and, to 
a lesser extent, for the construction and 
earthmoving equipment makers. 

Exports !^ould lead the way for 
textile and agricultural niac‘hinery, but 
most otlier equipmeirt makers expect 
a glum first half of 1972. The machine 
tool industry is in desperate straits, and 
expects no upturn before the third 
quarter of 1972. It is one of several 
parts of the engineering industry that 
will have to sack moi^ men. Mr 
Martin Jukes, director of the Engineer- 
ing Employers’ Federation, saiU just 
before Christinas that there would be 
80,000 jobs less in engineering at the 
end of 1972 than there had lieen at 
the beginning of 1970. Even if Mr 
Barber stokes up a boom that leads to 
a 20 per cent increase in demand for 
engineering products, the existing 
labour force would be able to cope. 
Admittedly, that existing labour foice 
should become richer, thanks to higher 
bonuses and more overtime and the 
like ; earnings in engineering 
may go up by at least 1 2 
per cent thiis year even without a new 
national wage deal. This carrot of 
enrichment for existing workers, and 
the lurking stick of higher unemploy- 
ment outside, may ease the way for 
some genuine pioductivi^'y agreemenits ; 
there is hope that by die end of 1972, 


the effects of the jnotorious Coventry 
toolroom agreement may have begun 
to wane and rational pkarft baigaining 
introduced in its place. 

Fewer but longer strikes 
What of labour lelations in general 
in 1972 ? By any standards, 1971 was 
a terrible year for strikes in Britain. 
Some 13 miHion working days were 
lost, more than in any year snnee 1926. 
But, in ithe first 1 1 mowtlis at any 
rate, there were oirty half as many 
Strikes as in 1970, although with 2^ 
times as many days lost in each strike. 
T'his was largely because of the two 
massive strikes early in the year at 
Ford and the post office. To start 1972 
with a bang, tliere is the real prospect 
of a national miners’ strike. If k 
happens, over i million days will be 
lost for every week that it lasts. 

The recent trend 'to fewer but longer 
strikes is likely to continue. Altfiough 
the employers who are hit may not 
appreciate the fact, this will be a 
national gain. Long Strikes are rela- 
tively much kss damaging than the 
Avort but frequerit strilra ^lidi have 
so plagued the British car industry 
and offier centres of shop stewards' 
rule. 

One reason why the outlook foi 
strikes in 1972 is brighter is tliat the 
final sections of the long-awaited 
Industrial Relations Act will come into 
force at the end of February. At first, 
It will be operated in a very pussy- 
footing way. Although the act allows 
employers to take unofficial strike 
leaders to court, very few will, Mr 
Robert Carr, the Secretary for Employ- 
ment, legards the court as the ultimate 
deterrent, to be used very seldom. He 
is also unlikely to want to make 
extensive use of the new emergency 
powers that he has awarded himself 
to call for a cooling-ofT period or a 
strike ballot ; but other ministers may 
press lidm to do so in the event of a 
big and obviously unnecessary strike. 



N^nh S$9 oil, soeouo: Stool, doubtful: Toehnology, modost: Concordo, oxponsive 


5« 


l-f' 




n I 'f' 


im' 


None the less, everyone will proceed 
with utmost caution. Unions a i not 
sure how employers will use the act, 
and vice versa. More cauitiion may 
mean fewer strikes. 

Even the most militant union 
leaders, like Mr Jack Jones of the 
Transport and Gcncnal Workers’ 
Union, seem to have expected that 
their own campaigns of non-co-opera- 
tion wilih the act would <juickly 
collapse. The TGWU began to amend 
its rules to conform with the standards 
for registration as far back as last 
January. But the trouble now is that 
union leaders are finding it tough to 
backtrack, bccau.se their members still 
believe ‘their leadens’ earher rhetoric. 
There are two possible scenairios : 

(i) 111 midsummer the National Union 
of General and Municipal Workers, 
currently sitting on the fence, may 
decide to registei. The leading white- 
collar unions, led by the National and 
Local Government Officers, would 
follow suit. In September the Trades 
Union Congress may reluctantly admit 
that its policy has failed, and by the 
end of 1972 most umon« may be on the 
regi.ster. 

(a) In midsummei the NUGMW may 
decide to deregister. Although some 
whrtc-collar unions will be registered, 
they may be disciplined or expelled 
from the TUG. In September the TUG 
would then reaffirm its policy. 


For the first tunc, scenario (a) is 
now looking a real posribiility. If it 
happens, the TUC will presumably try 
to keep the doubters in line by saying 
thalt the Labour party will win 
the next general election, and repeal 
the act. Mr Carr dislikes discord and 
wants unions to register. Buit he should 
not lose any sleep if the unions want 
to behave as inaisoohisls. Those who 
have not registered — ^and who still 
break any contradts when causing 
industrial disputes — ^will be liable to be 
sued for large isums 'in and after 1972 ; 
they will abo be paying more itax and 
losing membership. 

Hypermarkets on the way ? 

The generail forecast for 1972 must 
be for a year of conftinuing high 
unemployment, but also continuing 
consumer boom. This has boosted 
retailers’ confidence. Advertising and 
market research agencies are also 
optimistic. But one of the big 
shopping questions for 1972 has 
nothing directly to do with higher 
sales : should hypermarkets be allowed 
to sprout more or less at will all over 
the countryside, or should they be 
severely controlled to preserve existing 
Hugh ftreet shopping areas ? Opinions 
arc sharply divided. Tesco and Fine 
Fare, to mention two, favour the 
development of high-'tumover low- 
margin out-of-«town shopping centres 
catering for the motorists ; while 


StrllcM pMt th* pMk? 



Marks and Spencer and Sainsburys are 
firm High Stieeters. Local authorities 
have had no Government guidance/ 
apart from a very vaguely worded 
directive from the Department of the 
Environment last May; so far they 
have rejected all but a handful of the 
dozens of applications for hypermarket 
planning permission receiv^ in the 
part year. Glasgow has done so on 
blatantily sooialbtt, aniti>car-owner 
grounds. The Government will come 
under increasing pre.ssure to climb off 
the fence on this issue in 197a. It 
should do so, and make this the year 
of the motening shopper. * 


OUTLOOK 

72 


Nixon's good luck 

From New York it looks as if Mr Nixon will have a solid economic recovery 
going for him as he moves towards next November's election 


There is now a broad consensus among 
American economists that business in 
197a will be very good, possibly quite 
splendid. The devaluation of the dollai 
is having a favourable impact on con- 
fidence, far in excess of its imii>ediatf 
influence on trade. With the removal 
of American businessmen's fears of a 
world money crisi.s, there has been a 
sudden disappearance of pessimism. 

Conditions are right for rapid growth. 
Almost every depressant has run its 
course. Cheered by the continual scaling 
down of the American commitment in 
Vietnam, consumers are dipping more 
confidently into their pockets ; retail 
sales are rising. Housing and the car 
industry are already at boomtime 
levels. More important, businessmen 
are starting to expand their plans for 
new capital expenditure despite wide- 
spread under-utilisation of capacity. 


They are likely to invest more 
aggressively now that the tax bill of 
1971 has been enacted into law, bring- 
ing the Christmas goody of $16 billion 
a year of tax r^uctSons, pardy to 
consumeis (through beitter income 
tax exemptionB) aid pandy to business 
(through the 7 per cent investment tax 
credit and the validation of a 20 per 
cent permissible speed-up in depieria- 
tnon already mnt^ by the 
Treasury). Companies selling to foreign 
markets have been helped by the pro- 
vision for dome.stic-international sales 
corporations (Discs) ; half of the taxes 
of ei^rting companies — or special 
.rtifasidiaries set up by exlisting com- 
panies — wdli be dieltered so long as 
they plough back itheir profits into 
approved channels. After dns bill, the 
floral budget deficit for the year end- 
ing June 30, 1972, is stUl esthnatted at 


$23 billion, but it may comu closer 
to $30 billion. Even by 'the test of the 
“full employment budget” — ie, even 
if one counts in tihe taxes that would 
be leviable on extra earnings if the 
unemployed were ait work — the 
deficit is now around $8 billion a year. 

So official pdKcy is very aKumilatory 
indeed. 

Businessmen are, of course, still plain- 
tive about the wa^ and price controls. 
But, although jeopardised by an ^ 
administrativdy inefficient division of 
responsibility between the Pay Board 
and the race Commissbn, not to 
mention the slmdowy influences of the 
Cost of Living Council, phase Si just 
might work after sdl, at least for a while. 
The Pay Board has the difficult task of 
deciding whether to scale down the 
negotiated settlements already arrived ^ 
at between management sold the 



BARCLAYS BANK BRIEFING- 16 


MR. JOHN THOMSON, Chairman of Barclays Bank, takes a look ahead. 


Future role of the 
clearing banks 


I he recent re\isii)ii of the rules 
under whiich ihe clciiriiiy. bunks can 
operate has naturally given rise to 
plenty of tliscussion as to our future 
role, and some consideratitm ol the 
reasons i'or past changes may make it 
easier to hazard guesses as to what will 
happen in ihevears tocome. I'or a long 
tiineenjov ment has b 'cn derived from 
having a dig at “the t learers" as 
being part of Ihe hslabhshment the 
great sleeping giants, it has, howevei, 
been geneially accepted that their 
management should be cautious for. 
among other reasons: the high ratio 
of liabilitv to capital; the normal 
motives for which the long term 
stockholders invest in banks; the 
calamitous consequences of a bank 
failure and the ctTect of general 
policies on the monetai*' situation 
I 'nr all that, the dormant giant does 
roll over from time to lime despite 
the tendency of the Authorities to 
strap it down. 

We are, of course, in business for 
profit - a fact which seemed to me 
sometimes to gel overlooked when we 
were egged on to “disclosure'" and to 
competition in bidding for small 
deposits at a time when for business 
reasons it did not suit us to do so, 
however much we may have accepted 


that each developme':! would be 
tlcsirable at the appropiiate moment. 

Bank mergers 

In contemplating the prospect 
ahead, it is worth considering how 
manv clearing banks there ought to 
be. At the tuin o! the century many 
of the private and counlry banks 
joincil togetliei, partly because the 
partiieis felt that if they were to give 
adequate lines of credit to their 
pr(\uress,ve industrial customers, they 
would have too many eggs m one 
basket. Also, of course, it was 
prudent to have a widei' geographical 
spiead This process continued and 
now we are down to live, plus 
Coults, a w holly -owned subsidiary of 
the National Westminster. 

The joint stock banks were able to 
cope with the large customers for a 
time but merging also spread in a big 
way to industry. Once again ctmi- 
pames found themselves [uu large \'o\ 
their banker but instead of causing 
further bank mergers they divided 
their custom between more than (»ne 
bank, as had happened to meet legal 
requirements in the United Stales. 
I'hcre have been bank mergers for 
olhei reasons but contrary to some 



JOHN THOMSON,! D, J P 
Chairman of Barclays Bank Limited 


opinion I do not believe that 
reduction to a small number of banks 
in any way blunts competition, in 
fact rather the reverse My guess 
wcHild therefore be that however fast 
the economy may grow, that in itself 
would not Justify an increase m the 
number of “cicarers" although they 
may well need to enlarge and 
reorganise their branch netw'ork. 

"New deal" 

With the introduction id' the “new 
deal" for control ,ind competition, 
oui deposit and lending problem 
becomes more clearly recognisable. 
Our management will pivot on three 
points: the demand for money at 


CONTINUED ON FOURTH PAGE 




NEW MANAGEMENT 
STRUCTURE FOR 
BARCLAYS GROUP 



rhf husiness of (he Barclays (>roup is to lie separated int4» (hree areas of operation, with 
a C«roup Board in overall control. 

r'roni .January I the Board of Barclavs Bank l.iniited, with Mr, .John Thomson as 
( hairman, becomes a Croup Board, retaining its ultimate responsibilities but dele^atin^ 
very full powers to (he Boards of subsidary companies. I he operations ot these companies 
fall into three categories: 


United Kingdom clearing bank business 
This will he MUiFKi^ed h> a new ct>iiipan\ . 
Barclays Bank IJ.K. Manapenieni 1 iinilcJ, 
whose formal ion w as appowed In an 
lAlraoiilinary Cleneral Mecline. of Bar class 
Bank slockhokleis in November. 

The new compan> s Lieation will not 
involve any ^.han^es m leims aiul conditions 
ol serv.ce lor stall I'c: in ihe operations of 
Barclays' 35 dornesp; I ocal Head OlVices. 
Nor will It alter tht' vhain of responsibilitv 
below' Bsrard level, eveept that the (ieneial 
Managers (lo.iling with clearing bank 
husiness will report to the weekly meetings 
(d thc D.K. Management ( ompan> Board 
( hairman ol the new- C oinpany will be 
Mr. I imotliN H. Bevan. Sir Krchard Incase 
and Mr II. IK A I.ambert will be Vice- 
< hairmen and the maiorily of the dircclois 
will he also directors of Barclavs Bank. 


sura nee br'oking (Barclays Insurance 
Services ('omp^t'^y)- 

Mr'. W. Ci. Bryan, as a Deputy ( hatrnian 
of Barclays Bank, will be responsible for the 
1 maneial Services Division and will he 
Chairman (d each of the suhsidiaiy 
com pa mes concerned. I n co-ord i na 1 1 ng I be. r 
activities he will be assisted by Mr. D. S. Ci. 
.Adam who will remain a Cieneral Manager 
ol Barclays Bank. 

Ihe Barcla>s Unicorn Cir'oup of com- 
panies will continue unchanged rn associ- 
ation with the Trust C ompany. 

THE GROUP BOARD 

Mr. .lohn 1 honison remains C hairman ol 


Sir Frederic Soobohm Mr W G Br- 

the Ciroup Board and Sir hiedcric Sec 
and Mr. W. Cl. Bryan remain I> 
chairmen. Mr. T. H. Bevan an. 
Richard Pease will be joined bv Ni 
r. rukc who will be appointed a. 
ditional Vice-C hairman. It is mtendts 
Mr. D. I. . Wilde should also be appi 
a Vue C hairman on his letircmcni 
Cieneial Managei later in I972. ^ 

The “C ban’' will llms vompiise me: 
w ith executive lesponsibilits in iheopv i 
divisicriis and others co icerned solel , 
Ciri>up matters, then co-ordmalion 
ilcvelopment. 

To add to the repiescnlatu’in ol Ikn 
International at Ciroup level, Mr. Ri 
D>son anil Mr. Ci. Ci. Mruiev will jo 
Barclays Bank Boaril. And to pnn 
lurthcr link between the operating di\ i 


BARCriAYS GROUP BOARD 


Overseas and foreign business 

Barclavs Bank International will manage 
ail the Cl roup's overseas business. The 
Iransler to Barclavs International of the 
foreign busiiUAs of Barclays Bank should be 
completed bv the autumn ol 1972, 

Sir I ledenc Seebohm, continuing as 
Deputy C hairnum ol Barclavs Bank 
Limited, will dc' ole his lime piiiKipally to 
Ciroup aTair^ and will hand over the 
C’hairmaiv/mp of BaicUos InternaluMial to 
Mi. Anlhonv I . I’uke after Intcrnalionars 
Annual Cieneral Meeting in Januarv. Sir 
ITcderu. wil! remain a directo' ol Bai clays 
International. 

M*'. R. G. Dvson continues as Deputy 
('hairman and Mr. A S. Aiken and 
Mr. Ci. Ci. Money as Vice-Chairmen 

Financial services 

A Linancia! Services Division is being set 
up to draw together Ciroup activities i)ut- 
sidc the orbit of lian Urys Bank U.K. 
Management and Barclays InicinatKmal. 
These operations include “merchant bank" 
business and some FTirocurrcncy dealings 
(Barclays Bank (Londoii tV International) ), 
executor, trustee, investment management, 
and other financial planning services 
(Barclays Bank Trust Company); export 
finance, leasing and factoring (Parclav:» 
Export & Finance Company); and in- 


HARCLAYS BANK BARCLAYS BANK 

UK MANAGEMFNT LIMIIED INTERNATIONAL LUVUTED 


FINANCIAL 
SERVICES DIVISION 



'NOS AIRES 



V T H Bevan Mr A F Tuke 


A 


P 


l| 

1!T 

ih 


I S (i Mogford, Inlcrnalionars Senior 
[!i:i<d Manager, will also become a 
^•icmI Managerof Barclays Bank Limited. 
lECENTRALISED SYSTEM ' 

|i’ ; letter to slat!' Mr. John Thomson, 
i.Li's' Chairman, said: “While it is 
tjulil right to sepaiale the business into 
K .ueas ol responsibility for adminis- 
;iv»^piirposes, it is an essential part of the 
n (iiat we shouki never forget that we are 
: (j:OLip. and that the services c)l every 
: ol that ("iroiip are available to each ol 
aislomers in the United Kingdom and 
I’scas. 


iiB'Ihe new structure is intended to bring 


(■Liosei together and can rightly be 
inBii.icd as a further development in the 
idfcuialised svstem which has alwatys 
characteiistic of Barclavs' all’airs." 





NoUmlMr 1971 

rtm. % 

fi^Orirtk#i^Teb«eco 399 2 

Chfinloalt ' 329 2 

M«ttl Manfrftoluf# .. 149 1 

EfiQlfMiaHim .. 367 2 

Ol9ir6iii|}f)iflnii0 ... 993 9 

Shipbuildino' .. 364 2 

V991et«i .. 429 3 

Tffictikw «9d Uathar <299 2 

Odiar Manufaeturlnp 471 3 

Mcnuf«eturifi9 3.970 22 


OTH9II fkflQDUintOltl 
Agrtouttiira^ Fbraitlv and 

fliWna o 991 4 

Mining and Quarrying . . 150 1 

Cofinruotidn 540 3 

Total Othar PmduGliim 1.281 .8 


FCBSONAL 

Houia Purehaaa 484 3 

Othar Parionat 921 9 

Total ^araofial 1 .404 9 


Noyambar 1971 
C'am. % 

88ftVtC58 

Tranaport and Communication 298 2 

Public Utllitlaa .. .. 177 I 

Local Govarnmant 99 ^ 

Pataii Diiatrlbution ./ 407 2 

Other Qittribution 598 4 

ProfaasioncI, aeiantific and 

othar .. 885 4 

Total Sandcaa . . 2.204 13 


FINANCIAL 

Hira Purchase 181 1 

Proparty 498 3 

United Kingdom banks . . , 102 1 

Other Financial 775, 4 

Tout Flfianolal 1.955 < 9 


OV8II8EA8 

Ovanaak raaidants--lnoluding ^ 

banka ovartaaa 6.530 39 

TOTAL ADVANCES . . .1 6.644 100 


PRODUCTION OF CARS (Monthly averages— thousands) 



U.K. 

U.S.A 

GERMANY 

FRANCE 

ITALY 

JAPAN 

1969 

1st Quarter ' 

150 

773 

248 

186 

149 

192 

2nd Quarter 

162 

739 

253 

199 

140 

207 

3rd Quarter 

118 

518 

217 

136 

115 

218 

4th Quarter 

132 

687 

262 

201 

89 

256 

1970 

1st Quarter 

147 

630 

262 

214 

147 

236 

2nd Quarter 

157 

726 

286 

221 

137 

265 

3rd Quarter 

92 

397 

210 

153 

131 

261 

4th Quarter 

153 

435 

286 

232 

159 

298 

1971 

1st Quarter 

144 

807 

294 

240 

143 

295 

2nd Quarter 

157 

767 

296 

226 

138 

297 

3rd Quarter 

n.a. 

562 

n.a. 

n.a. 

n.a. 

293 


NATIONAL SAVINGS**-AWQUNT OUTSTANDING (C's miition) 
Nat. Savings Bank Trustaa Saw Bank 



National 





British 

Premium National 



Savings 

Ord. 

Investm't Ordinary 

Special Savings 

Savings 

Oavatop. 


End of 

Carts. 

Acc. 

Accounts Dept, 

Oept. 

Bonds 

Bonds 

bonds 

Ot»M» 

1998 September 

2.912 

1.513 

171 

1.052 

1,290 

102 

666 

507 

417 «,|640,, 

Oacember 

2.602 

1.589 

190 

1.054 

1,311 

136 

694 

692 

879 9,646 

1999 .March 

Z687 

1.987 

210 

1.081 

1.339 

147 

713 

678 

973 ''8,61#.' 

June 

2;563 

1.550 

220 

1.070 

1.349 

188 

729 

549 

333 i;846 

Saptambar 

2.935 

1.522 

231 

1.052 

1.361 

217 

741 

,919 

939 9.919 

Deeambar 

2;507 

1.499 

245 

1,043 

1.398 

307 

763 , , 



1970 March^ 

2^483 

1.498 

281 

1.073 

1.392 

322 

795 

'.'Air' 

396''''#i#i7' 

June 

'2,«3 

1.478 

275 

1J)74 

1.419 

372 

/774:;V.' 

''"372 

,990-' 

Saptambar 

2.43J 

1.469 

295 

1.075 

1.491 ^ 

406 

.7# : 



;0acambar 

2,481 

1,441 

■i 

310 

1.073 

1,498 

439 ; 

'7ja7 , 



lOTlMdfth 

2,802 

1.472 

324 ' 

1.130 

vm 

490 

807 

246 



24132 

1.457 

337 

1,145 

1.542' 

626 

845 

424 

m Ew 

Saptambar- 

-2.683 

1.452 

354 

1,14b 

1.593 

571 


184 

'999:', 


«MI PURCHASE ANO INSTALMENT CREOIT M MEAT IRiTMN S»Mbn«Ny .|4lj(«tad mWion) 




RataiJers 



Finance Houses 

Tbtil 

, . L 


New 


Change Now 


Chang* Naw 

' V 

change 


credit 

Rtpay- 

In 

credit ; 

Repay- 

in «rMit 


in 


astandad 

mants. 

debt 

astandad 

ments 

9ebt «(taini9*d 

mams ^ 

debt; 

1999 Ut Otr. 

194 

199 

v'-Ab 

172 

' 'V 179 

•■7 ;.#99;' 

878 : 

- 12 

' < 2nd'Ckt. 

208 

199 

/+ 8 

; m 

. 193 

-10 379 

■381 . 

- ' 'T -2,' 

,9rd Qtr, 

209 

,40?" 

'"Ti 

' 179 

ISO 


flOO 

■- '7 

, 4tb Qw: 


206 

'If 

, ’'<80; '' 

TBSlI f 

- :o a»o 


'•h 2. 

t970;i$i Qtr. 

215. 

21,0,- , ■ ■ 

■; . + ,6 

‘ 187': 


i^;9- '.483 ■ 


+' 12 

■v-^dOb.,. 

2!f 



'.:2il!4' 

: ' 

.i-fl'O'' „933-' 

m 

■ '-F' 29 

3rd. Qtr. 

227 


4:' '9 

211 

‘ 200 

■' i Ml -■ .439’ • ' 

/ 


4th 

232 


•V. >^'5 

■22ft 

,197^ 

> :*a3 •4Kt . 

. 423 


1971 tat‘5E' 

m 

.m" 

\.t,n 

' 


- •. ,r47 ,.459.’;: 

406 ' 



.^288 : ■ 

■"m/: . 


■■ 

; VM 


,1 -'1^1 ■ 

,■■•‘ + -96; 

3fd Otr-TV'^’B.. \ 




^ 229 

',•.,+■66. Aift,.:' 

*: m • ■ 



BARCLAYS BANK BRIEFING— 16 


Future role of the clearing banks 


continued from page one 


appiopnalc dilfercnh.il rales, I he 
altraehon of tieposils which will 
provide an acceplahle mar gin when 
tieployed; and the cosl t>l main- 
taining the requisile proporhon ol 
reserve assets. 

Clearing banks liave alread\ Iniill 
lip a considerable experlise m bon ow 
mg and re-lciuling large sums at 
conipetiti\e rates m steilmg and 
l urocurn'Mcies. I his was all satis- 
I act only and pndilabl> proceeding 
through I he medium of subsidiai> 
companies w hile the ciamoui went on 
for the abandonment ‘I the “carter* 
on the deposit mtercM olfered b\ (he 
paient companies these parents 
were, ol course, struggling, under a 
handicap of at leasi one per cent m 
interesi rates liue to the imposition c>f 
special depi'isits and to the lK|uidii> 
ratios then let) lined. When iiicreascil 
outlets were blocked there seemed 
little point m olfenng a highei puce 
for m,MK*> already a\ ailable Now the 
sitnahon is changing as we hoped it 
would. Cuaiiiilalive limits ha\e iK’en 
abandoned and lemlmg rales are 
based on the price td' mone>, rather 
than on Bank Rale which ma> 
llucluale for considerations not 
nnmeihaVe'\ relesanl to liiaiTeslic 
ban I* lending. 

Decisions will iheieforc, I am glaii 
to say. be based on judgment of 
moiielai\ siippl'v .md demand, and 
relative progle^s will no longer be 
measured by totals t)l degiosiLs whuh 
could be unpioliUiblv booUed b\ 
payment of too lugh a price 

Manager's role 

A further [’lopular topic o! 
tiiscussion IS the future role of the 
bank manager Will he beca>me a 
super sales agent, expert m \erv little, 
but exploiting our wide branch 
representation to introducr customers 
to cenlrallv administered services? In 
my own v iew this w ill only be part of 


his dunes. Manx actixilies, such as, 
lor instance, facltu-mg, leasing, trustee 
.ind investment management, are 
best earned out centrally while 
using bnmclies as their sales organi- 
sation. None the less the customer 
will expect Ins branch manager to be 
a comi'ielenl man of business,- able to 
give soLintl financial advice and to 
give immediate decisions which will 
be ii) the advantage of bi>th Kmk and 
customer. 

Finallv, as international trade 
develops and movement of capital is 
permitted many problems will arise 
for the clearers. Between the less 
active centres, correspondent 
relationships are cheap and will 
persist, they lend to depend to a 
considerable extent on nomination of 
a bank bv customers or on reciprocity 
of business In the world's linancial 


centres policies will be adapted to 
local legislations and to prospects of 
profitability, with the object of giving 
good service to multi-national cus- 
toniers without locking up lim- 
remunerative capital. It ts very 
expensive to “pepperpot” branches 
all over the globe, and it will often be 
preferable to join consortia of banks 
possessing ample funds, progressive 
customers and local professional 
expertise. In other places it may pay 
to open new braiU'hes, sometimes 
forming subsidiary companies for 
that purpose 

C'apital is costly and it is now less 
fashionable than it was to lake the 
very long view. Investment by clear- 
ing banks will call for an adetpiate 
return to stockholders m a com- 
paratively short space of lime ■ 


EXPORTS AND IMPORTS (Monthly averages seasonally adjusted $’8 million) 


EXPORTS (FOB) WITH PERCENTAGES OF G.N.P. 



U.K, 

U.S A. 

GERMANY 

FRANCE 

JAPAN 

1968 3rd Quarter 
4th Quarter 

1,316 

1,350 (15%) 

3,024 

2,893 (4-0%) 

2,126 

2,255(19%) 

1,171 

1,142(10%) 

1,101 

1,167(9-0%) 

1969 1$t Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

1,340 

1.412 

1,617 

1,534 (16%) 

2,588 

3.345 

3.346 

3,386 (41%) 

2,144 

2,422 

2,453 

2,651 (18%) 

1,197 

1.272 

1,210 

1,299 (12%) 

1.243 

1,316 

1,378 

1,394(10%) 

1970 let Quarter 
2nd Quarter 
3rd Quarter 
4th Querter 

1,676 

1,687 

1,526 

1,762(16%) 

3,492 

3,696 

3,036 

3,617(4-4%) 

2,693 

2,834 

2,898 

2,966(10%) 

1,426 

1,487 

1,491 

1,654 (n.e.) 

1,537 

1,582 

1,638 

1 , 680 ( 10 %) 

1971 let Querter 
2nd Querter 

1,628 

1,841 

3.787 

3.757 

3,032 

3,214 

1,613 

1,679 

1,869 

1,986 

tPORTS (CIF exccKt U.S.A.— F08). 





1968 3rd Quarter 
4th Quarter 

1,616 

1,656 

2,844 

2,628 

1,730 

1,775 

1,261 

1,322 

1,102 

1,142 

1969 let Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

i.620 

1,683 

1,672 

1,6B6 

2,562 

3.214 

3dio 

3,125 

1,931 

2,043 

2,067 , 

2,266 

1,354 

1,493 

1-^967 

1,454 

1,161 

1.154 . 

1,348 

1,366 

1970 Ist Quarter 
2nd Querter 
3rd. Querter 
4tH Quarter 

1,716 

i;836 

1,767 

1,626 , 

3^240 

6,305 

3,328 

3,448 

2 , 4:41 

: 

1,659 

1,659 

^1.460 

1971 1st Quarter 
2nd Quarter 

1,676 

3,608 
. 3,946 

;tS3» 

1,635 

1,727 



This BRIEFING has been prepared by Barclays Bank in the hope 
that it will provide a useful service for journalists, economists and everyone interested in finance. The 
tables have been specially compiled from the latest available statistics. 

The Bank's Press and lnfoj;mation Manager is Mr, W. W Ottewill (01 -626 1567, Ex. 7363) 



t, igya 


susmzss outlook *^s 


63 



h Coming out again ? 


unions at the bai^aining table or, 
alternatively, of determining which will 
be the “last cow through the barn 
door." If it scales down existing 
agreements, it will probably trigger a 
number of strikes in important areas. 
Its tendency to dither is strengthened 
by the argument that there is an 
element of catch-up involved in most 
of the contracts now being negotiated, 
since some of them are coming to the 
table after a three-year break. 

Price curbs are tougher 
Fortunately for the Administration, 
the Price Commission, under the 
strong leadership of Mr C. Jackson 
Grayson, is pulling some of the Pay 
Board’s chestnuts out of the fire. By 
refusing to validate in prices all of the 
increase inherent in the Pay Board’s 
allowance of a 15 per cent wage 
increase in the coal industry, the com- 
mission served notice that companies 
granting more than the guideline 5.5 
per cent pay rise were likely to get a 
hostile reception when appearing for 
price increases. Some managements may 
get the message. Businessmen have been 
afraid all along that the Price Commis- 
sion would have sharper teeth than 
the Pay Board : now that this has been 
shown to be true, it must toughen their 
attitude in pay bargaining. 

The unions are also aware that the 
public at large — including their own 
members — ^would be quite content to 
live within the guideline of only a 5.5 
per cent wage increase a year, if there 
were visible evidence of a slowdown 
in prices and if real incomes were ris- 
ing. Unfortunately for Mr Nixon there 
are fresh sets of price increases com- 
ing^ along that weirt in idioyance 
during the three-rnoni^ freeae that 


began on August 15th. Also, business- 
men, not quite sure whether the 
programme will work — and anticipat- 
ing another freeze somewhere down 
the line if it does not — are prepar- 
ing a long list of requests for further 
price increases. These will come all 
at once, and may give the price 
indexes a temporary bulge — unless 
the Price Commission pursues a 
deliberate policy of delaying tactics, 
pushing approval of increases forward 
by several months. 

Six per cent growth ? 

The President’s great good fortune, 
in this election year, is that there is 
almost certain to be a large increase 
in real incomes and production. A 
pessimistic American economist these 
days is one who expects gross national 
product to grow only by $85 billion 
in 1972, with real growth of not quite 
5 per cent. The consensus has shaped 
up for a gain in gnp of about $95 
billion, to about $1,147 billion, with 
real growth of 5^ or 6 per cent and 
a price rise a bit short of 3^ per cent. 

There is as yet no official forecast. 
When one is stitched together for the 
1973 federal budget by late January, 
it will be viewed with a jaundiced eye 
because last year's was .so blatantly a 
number pulled out of the hat for 
political purposes. The present views 
of the various agencies involved in 
official forecasting are not far from 
the outsiders’ consensus guess of a $95 
billion increase in gnp. But this time 
round the Council of Economic 
Advisers, smarting from the criticism 
levelled at it for its genuflection before 
the White House staff last year, is at 
the low end of the totem pole, with 
the Treasury on the high side. Mr 
John Connally, riding high at the 
moment, is reportedly plumping for an 
increase of a handsome $105 billion. 

Circumstances could hardly be more 
propitious for Mr Nixon as he moves 
toward the November election. This is 
all the more remarkable considering 
the low state of his political fortunes 
during the summer doldrums. He will 
have going for him next autumn a 
solid recovery participated in by almost 
all industries. The unemployment rate 
should be declining ; not as rapidly as 
he had once hop>ed, but k has been 
so high for so long that there will' 
be a general feeling of relief when it 
begins to fall. Business profits are 
expected to be quite good, despite the 
hardshell attitude of the Price Com- 
mksion ; ibost econoniists are forecast- 
ing diat they will rise by about 15 
per cent in 1972, fcdloiwing the rise of 



about 10 per cent in 1971 (which Wall 
Street is still celebrating). The Federal 
Reserve Board seems willing to furnish 
sufficient credit to fuel a double-figure 
advance in gnp ; if so, the rise in 
interest rates — which is bound to occur 
some time — may be moderate enough 
not to restrain expansion. 

The Economist’s own gue.s.s for 
America in 1972 tends towards the 
high side of the consensus : a rise in 
gnp that .should pass the $too billion 
mark, putting total gnp above $1,150 
billion — and with all major economic- 
sectors registering year-on-year gains 
of from 8 per cent to 10 per cent in 
current dollars. If this happens, the 
unemployment rate, recently stubbornly 
holding at 6 per rent, should be down 
to about 5 per cent by the close of 
1972. .Vnd the indications are that 
President Ni.\on will wish to continue 
with expansionary' jrolicies through his 
second presidential term. 

Marketing 
in Europe 

fssue No. 110 JANUARY 1972 contains the 
Trade Review of 

DAIRY PRODUCTS, MEAT. FRESH FRUIT and 
VEGETABLES in GERMANY and ITALY 

Special Reports 

CANNED VEGETABLES in FRANCE 
SOFT DRINKS in the NETHERLANDS 
PETFOODS in BELGIUM 

Annuel subscription £60. Airmail postage 
extra. Single copies £9 each. Details from 
the Subscription Department 

THE ECONOMIST 
INTELLIGENCE UNIT LTD 

Spancar House, 27 St James's Place. 

London SW1A tNT. Telephone 01 493 6711 

633 Third Avenue, New York NY 10017. 

Telephone 212 687 6860 

THE ECONOMIST 
INTELLIGENCE UNIT LTD 
(EUROPE) S.A. 

137 Avenue Louise. 1060 Brussels. 

Telephone 38 19 30 



64 


vm 'Iiaoimw 


"vU'mvaiB OUTUKMC 'jit 


OUTLOOK 

72 


What it looks like elsewhere 


Our correspondents report on other rich and near-rich courftries 


Germany: bully for 
exporters 

Bonn 

I'hings have been looking a lot more 
cheerful to German indiistriali.sts since 
the D-niaik got away witli a smaller 
upvaluation than they expected. 
Forecasts liavc aheady put the coming 
year’s trade surjilus even higher than 
in 1971 ; and altliough tliat suggests 
tlie D-mark could be floating upwards 
again in 1973, for 1972 it s[jells escape 
from tlie threat of a real recession. 
And, just as when (Germany got out of 
its mini-recession in i9b6-(>7, it will* 
again be an ex|)ort-led recovery. 

Although the econ<..uics minister, 
Herr Karl Schiller, has said tliere will 
he no iininediate lielp for individual 
industries, such as slup[)ing and ship- 
building, which dejjend heavily on 
dollar revenue, there could be other 
lillips. One hu'. already come with last 
week’s cut in the discount rate, from 
4J 'to 4 jier cent, and a reduction in 
tlie lianks’ minimum reserve retjuire- 
ments. More important, Herr Schiller 
has the pei'fect reflationary measure 
at hand, in the sliape of a tax surcharge 
which he collected during the year 
ended July, 1971, and which he can 
repay any time he chooses now, inject- 
ing DMfj.h billion ($1.8 billion) into 
the ecinioniy. A contingency reserw of 
DM2. f) billion ill his last budget could 
provide a further stimulus if needed. 
No one has actually said that these 
funds will he brought into play in 1972, 
but Herr Schiller as good as gave the 
game away early in December by 
predicting a real growth rate in gnp 
(rf between 2 and per cent for the 
coming year, wlien virtually every 

economic expert in the country agreed 
that if nothing was done (Germany’s 
economy would grow by no more than 
I per cent. The tax repayment and 
contingency reserve s^hould jack up the 
figure by i per cent. 

Given this boost, a growth rate for 
Germany in 1972 of 2 per cent — or a 
bit more, allowing for the currency 
realignment — is a reasonable guess, 

though much still depends on tlie 

precise timing of the move. Herr 

Schiller will probably want first to see 
some evidence of a slowdown in prices 


(still rising at nearly 6 i>er cent). 
But wage settlements do seem to be 
responding to the situation. Unemploy- 
ment is already up by inorp than half 
on a year ago and will rise further. 
N<^arly 100,000 workers are on short- 
time ; and there is scarcely a 
manufacturer in the country who any 
longer claims tliat he cannot keep up 
with demand. So the metalworkers, 
after their three we<‘ks’ strike, settled 
for 7 per cent for a 15-month period, 
which is nicely within the goveniment’s 
guideline of 7 or 8 per cent a year for 
total wag(‘s and salaries. The 1.6 
million public employees, now negoti- 
ating new wage contracts, may get 
even less. Fa'cii so, the cost of living in 
(h^rmany is expected to go up !)y 
around 4J per cent in 1972. 


Japan : how much 
recovery ? 

Tokyo 

Despite the revaluation of the yen, the 
outlook for the Japanese economy gives 
sonic room for cheer. The latest guess- 
timates of real growth heard in Tokyo 
for the fiscal year starting in April, 
1972, range from the di.stinctly cautious 

7.3 per cent put out by the official fore- 
casters of the Economic Planning 
Agency to the 8.6 per cent of the Japan 
Eiconoinic Research Centre. Both fore- 
casts imply more modest gains for 
1972 as a whole, but growth will be 
accelerating ; the JERC’s calculations 
would have the economy on a 10 per 
cent growth path by next autumn. 

Admittedly, the JERC’s calculations 
wer'c made on the assumption of a 

14.3 per cent revaluation of the yen 
instead of the eventual 16.9 per cent. 
But the economists do not feel that 
this will change the picture much. The 
most (juestionable part of the JERC 
forecast is its optimism about invest- 
ment. For after the enormous increases 
marked up in the 1965-70 boom (when 
the share of gross fixed investment 
in gnp mse nearly seven full points to 
a record 37.6 per cent), private invest- 
ment may have oome to an end of a 
medium-term cycle — and one unusu- 
ally closely geared to exports. In the 
last two years of the boom, 1968 and 


19699 approximately a fifth of all new 
private investment was directly in- 
duced by buoyant foreign .sales pros- 
pects. 

None the less, the JERC reckons that 
private plant and equipment expen- 
diture will rise some 8 per cent in 
volume in fiscal 1972, rebounding 
from its unusual drop in fiscal 1971. 
The EPA, on the other hand, sees 
private investment rising by only 3 
per cent and is also less encouraging 
about private housing. 

While the EPA ha.s remained silent 
on government spending, the JERC has 
forecast a rise of 30.8 per cent in fixed 
capital formation Ijy the government, 
against 24.8 per cent in fiscal 1971. 
This may l>e die vital point for the 
immediate future. The J point cut to 
.]4 per cent in the discount rate this 
week, the fifth reduction in 15 months, 
will help to buoy up the recovery. 
But easier credit may not work its old 
Japanese magic in today’s situation. 
The real trick will be to accelerate an 
alreadv overdue shift in emphasis 
away from private investment towards 
public investment in social capital. 

On the balance of payments, it is 
the EPA which predicts the more 
buoyant outturn on current and long- 
term capital account. The official 
e.stiniate puts this basic surplus at 
$3.68 billion for fiscal 1972 : the JERC 
at $1.78 billion. 

Clearly Japan has not been knocked 
flat. The peculiar adaptability of the 
Japanese, and the close liaison between 
their business and government, may 
once again work to confound tlie 
pessimists on growth, 


Who will make way for America? 

Shares of total manufacturing exports 




IHK SOOMOMIBT JAWAKV* 1, 197 % 


Dunkirk changes gear 

To-day, Dunkirk has facilities to handle 125 000 T ships. 

By 1 974 Dunkirk will be handling 300.000 T ships. 

The industrial zone currently covers 3.750 acres 25.000 acrus 
are in the course of preparation, of which 20.000 in the [ > 1 
immediate neighbouring of port facilities. 

Dunkirk, a coastal industrial zone is growing rapidly. 

Dunkirk, focal point for industrial North-West Europe. vMIDi om 


PORT AUTONOME DE DUNKERQUE 
TtinpMoGiiiltoNi 59 OUNKEROUE (NIANCI) T«l 98 68 00 8664 00 T*tai82 065 

ynD CHAMBRE DE COMMERCE ET D*IROUSTRIE DE DUNKERQUE 
Snip 1 am FrayOMt 58 OUNKHQUE (FRANCE) TM 68 6010 



I h*t 0 s tMnhus h i nf ttgn scld tht adt et t /n rnt r ft r mjfnnatwnal purpo et t.nly and t nfither an offer t jell 
nor ourtlaiton ft* ffertj^yany f the e cfunltes 


1,093,052 Shares 


Clark Equipment Company 


BlyCh & Co., Inc, 


Common Stock 

($7.50 par value) 


Lehman Brothers 

iBMrparaltS 

The First Boston Corporation 


A. G. Becker & Co. 

iBaorporaltd 


Drexel Firestone The First Boston Corporation 

lM«nMr*to6 

Eastman Dillon, Union Securities & Co. Goldman, Sachs & Co. 

iPMrparaM 

Hornblower ft Weeks-Hemphill, Noyes Kidder, Peabody ft C 


duPont Glore Forgan 

latarpwaicd 

Halsey, Stuart ft Co. Inc. 
Lazard Frcrcs ft Co. 


Loeb, Rhoades ft Co. Men 

Salomon Brothers £ 

Wertheim ft Co, Wl 

Reynolds Securities Inc, 

Bank flir Gemeinwirtschaft 


tphill, Noyes Kidder, Peabody ft CiO. Lazard Frcrcs ft Co. 

biMrpwratai 

Merrill Lynch, Pierce, Fenner ft Smith Paine, Webber, Jackson ft Curtis 

lawarparalcA lawrMrated 

Smith, Barney ft Co. Stone ft Webster Securities Corporation 


Smith, Barney ft Co. 

laaoraaratai 

White, Weld ft Co. 


Dean Witter ft Co. 


Burkhardt ft Co, 


T ft Co. Bache ft Co. 

‘ala4 iBcarparaUd 

ShearMm,Hammill ft Co. 

lawrMratad 


Credit Industriel d’ Alsace et de Lorraine 


Dmit Ms^^ | ton h Dmdnerlk 

S^fti Gtoirale de Banque S.A. 

Dicemherl^ tm 


Hamfaros Bank Morgan Grenfell and Co. 

U«Ma« Lhaltal 

C.G.Trii(ikaus Westdcntsche LandeslMnk 
Ginwentrale 


66 


WJSINESS OUTLOOK ’ya THE EOOli6)ilET JANHMfttf' I, IQT* 


France ; smiling 
by order 

Paris 

In the end France was dazzled by the 
gilt on Mr Nixon's devaluation cake, 
and accepted a considerably larger 
up valuation of the franc against the 
dollar than M. Pompidou had earlier 
considered acceptable. Put officials in 
Paris prefer to point out that, compared 
with the position last May before the 
D-mark floated, the French have still 
won a marginal trading advantage. 
They are therefore facing 1972 with 
some confidence, although quick to say 
that the new year will not he paved 
with roses. 

France's industrial production is not 
expected to rise quite as fast in 1972 
as it did in 1971, when it chalked up a 
6 per cent gain. Manufacturers' new 
orders — particularly export orders for 
chemicals, household equipment and 
metals — have fallen off slightly in tlie 
past couple of months. If this slacken- 
ing is anything more than seasonal, 
exports could grow by only 8 to 10 
per cent in 1972, compared with 
the thumping 12 per cent in 1971. 
Any reces.sion in Germany, which is 
France's mam market, could hit them 
harder still I'his would he serious 
because exports provided some of the 
main steam behind the French 
economy in 1971 ; they exceeded 
imports in every month except 
September, and in several months 
anuanued to over Fr 10 billion. 

In 1972, public investment is to be 
increased ; and steps may be taken 
early in the year to stimulate private 
investment, probably through tax 
reductions. Private con.sumption should 
continue to be buoyant, but it will be 


surprising if feal gross national product 
rises by much more than 5 per cent. 
This would fall short of the target 5.9 
per cent set in the national plan for 
each year from 1971 to 1975. But it 
would still be one of the highest growth 
rales in Europe. 

In 1971, consumer prices rose about 
6 per cent and wages about 10 to 12 per 
cent, leaving workers about 4 to 6 per 
cent better off. Under present official 
guidelines, prices are not supposed to 
rise by more than 4.5 per cent in 1972, 
nor wages more than 9 per cent. The 
guidelines are having some success. 
Since October over 100 contracts have 
been signed between the government 
and different industries severely 
limiting price rises until next March. 
The government has been pursuing 
a policy of signing sliding-scale wage 
contracts in tlie nationalised industries 
giving fairly modest rises immediately 
but with a cost of living clause. It is 
encouraging that this type of contract 
is now beginning to be picked up by 
private industry as well. 

Italy ; up to 
government 

Rome 

Italy needed that little bit of luck in 
the world currency realignment in 
which it managed to unhitch itself from 
the French franc and British pound, 
effecting a i per cent devaluation 
against them. Compared with May it 
has won a net 4 per cent devaluation 
against all the currencies of its Euro- 
pean trading partners, who between 
them lake 50 per cent of its exports. 
Not that the small concession will have 
much direct effect on Italy’s problems, 
which have little or nothing to do with 


external pressures. Italy has large 
foreign exchange reserve.s, and is rather 
pleased with itself for not taking in 
more in recent months ; it acquired 
only $400 million out of the $13 billion ^ 
bought by central banks in the last 
four months before the dollar cheap- 
ened, having craftily made early repay- 
ments of loans of $800 million or so. 
In that one respect, the Italian cry is 
“ Tm all right, Jack ” or “ lo sto bene, 
Giovanni.’’ 

In all other re.spects, Italy’s* 
economic outlook is grey. After 23 
ballots to elect a president, it does at 
least have a new' head of state, but no 
head of steam in its economy. An 
almost uninterruptedly good record of 
postwar growth has ground to a halt, 
with only about a i per cent rise in 
gnp in 1971. Why ? Industrialists, 
almost to a man, blame the labour^, 
unions, saying that the very big wage 
settlements in the hot autumn of 1969 
— and continued labour agitation since 
— have made it impossible for them to 
take investment decisions. But they 
agree with the unions that there is one 
obvious way -to get the ^ Italian 
economy moving again : the govern- 
ment must accelerate public works 
expenditure, especially on housing, the 
healtli services and education. Reform 
of these is long overdue. 

'I'he trouble is that the sy.vtem of 
determining what the Italian govern- 
ment can spend is so inhibiting that 
the money is never actually spent. As 
one example, a law was passed in 1967 
providing L200 billion ($320 million) 
a year for five years for the .school- 
building programme in special areas 
Every municipality decided how main 
schoolr(X>ms they needed ; their collec- 
tive proposals added up to twice whai 
the government had allocated. By the 
time this overbidding had been 



When ftn told to .go out and spend and spend beceuse ifs good for me and growth and the gross rtatiormf product, 



67 



slimmed, two years had gone by. Even 
then, the government only provided 
money for building ; and Ae local 
authorities had to buy land which they 
could not afford. So another law had to 
be passed. By the fourth year of the 
programme, only L335 billion had been 
spent, ki place of die L800 billion 
allocated. There is no carry-over of 
unspent money after five "years. The 
new layer of regional government is 
likely to increase the lag, because 
everything will have to go through yet 
another layer of politicians. 

A five-m'an team, under the prime 
minister, Signor Colombo— and includ- 
ing his ©ndmsiastic et'onomic adviser, 
Professor Ferdinand© Ventriglia — -is 
trying to speed up the bureaucratic 
miachinery. But the deadweight conies 
less than is generally said from the 
bureaucracy — and more from Italy’s 
antiquated legislative procedure, which, 
in some of its most important aspects, 
daltes back to 1892. In 1972 this 80- 
year-old impediment is likely to mean 
that increased government spending on 
public works and housing will come 
only partially and sluggishly to the 
rescue of Ae Italian economy. Optimists 
say Aat Italy's real gross national pro- 
duct may grow by 2 per cent or so 
in 1972. Some of the best realists in 
Rome are expecting no more than a 
halt to any further fall in it. 


Australia : an 
election year 

Canberra 

Efforts to curb inflation in Australia 
have been singularly unsuccessful. Some 
of Ae inflation is imported : of the 
rise of nearly 7 per cent in consumer 
prices over the past 12 months, 



BU 6 INKM OUTLOOK ^72 

higher import prices accounted for 2 
percentage points, Australia’s decision 
to revalue by only 6.3 per cent against 
Ae dollar (implying a 2.1 per cent 
devaluation against the pound sterling 
and 1.75 per cent on average against 
its other main trading partners) will, 
of course, do noAing to help on Aat 
score. But, the main thrust 
to inflation is coming from wages. 
Weekly earnings are still rising at 
around an annual 15 per cent. 

The independent arbitration commis- 
sion which fixes basic wage rates has 
paid only limited regard to the need 
for moderation, and indeed awarded 
a nationwide 6 per cent rise a year ago. 
This time round, however, the boaid 
has postponed the key hearings, 
normally held in December, until 
February, and lias already rejected 
union claims for an extra week’s 
holiday. But employers have also been 
ready to negotiate over the odds. 
The government has replied by 
banning resale price maintenance, 
promising to put more teeth into its 
laws on restrictive trade practices and 
faying it will review tariffs. It has also 
cut the growth in government spending 
and raised taxes. The result has been 
a stiffening of employer resistance to 
wage demands and a rise in unemploy- 
ment to its highest for a decade. 

However, 1972 is a general election 
year. With consumer spending 
running below Ae estimates given 
by Mr Billy Snedden, the treasurer, 
in his budget last August, and 
the underlying growth in gnp probably 
no more than 4 per cent instead of the 
f) per cent he then forecast, some scope 
exists for further stimulation. The 
danger is that, as election day 
approaches, Mr Snedden will do too 
much, before the wage-inflation spiral 
has been eliminated. 



, but ifs nice to got a bargohir now am! A«f} 


South Africa : a 
very cheap rand 

Johannesburg 

That Ae rand was devalued against 
gold was no surprise. But few 
observers expected ais big a change as 
12 per cent — over four points more 
Aan Ae dollar. It will certalinly 
improve the competliltiveness of South 
Africa’s canning and other export 
industries against Australia, and ought 
to stem South Africa’s mounting pay- 
ments deficit, especially allied to the 
severe tightening of import controls 
ait the end of November. Whether it 
will get South Africa teck on to the 
envisaged grow’A track of 3.5 per cent 
a year remains to l>e seen. 

For 1972 Ae most optimisttic growiti 
forecast comes from the Stellenbosdi 
Bureau for Economic Re.scarch, which 
predicts 4.5 per cent, thanks partly to 
the devaluation. But most business- 
men regard this as supreme 
optirnisiti. Vital imports of capital 
equipmen»t will be more expensive. 
Government measures to check infla- 
tion (the cost-of 4 iving index rose 6.5 
per cent in the year to October) have 
borne heavily on Ae private sector. 
Even though government spending has 
been rising fast, consumer spending 
has slowed, while fixed investmeot and 
productivity have sagged badly. Nor 
is there mudt prospect of relief for 
company profit margins. Apart from 
the additional boost to costs that 
devaluation and import protectionism 
will give, Acre is little prospect of any 
easing of wage inflation in SouA 
Africa’s artificially ronistricted labour 
market — Aat is, unless more jobs 
become open to non-whites, among 
whom unernpiloymen't has been rising. 



68 

Canada: brighter. 
ex surcharge 

Montreal 

Without ‘the American surcliarge and 
with the investment tax credit avail- 
able also for non-American capital 
goods, the Canadian economic outlook 
is much brighter than in tha autumn 
— the more so since Ottawa has 
successfully held out for a floating 
exchange rate. Even before August 
igth, Canada’s current account was 
shifting back to a familiar deficit. From 
an unprecedented surplus of $Ci,i 
billion in 1970 and a much smaller 
projected surplus for 1971 of around 
$C3f)0 million, exports of goods and 
services arc cxjjcrted to fall short of 
imports l>y at least $0400 million in 
1972. The mild economic lecovcrv 
now under way has been pushing up 
imports, while exports to western 
Europe and Ja|>an have been falling. 
If the American cxi>ansion really zips 
ahead, Canadian exp'*rts should pick 
up. The government fiopcs that would 
make Canadian husinessmen revi.se 
upwards their capital spending plans : 
a recent surve\’ showed they were 
thinking of spending only per cent 
more on plant and equipment in 1972 
than in 1971. 

Two imponderables are the outcome 
of the inevitable negotiations to revise 
the United States-Canada car-parts 
pact — which has .so far worked indis- 
putably in Canada’s favour, contribut- 
ing some million annually to 

the trade sur[)lus — and the new guide- 
lines Washington wants hammered out 
for defence cost-sharing arrangements. 

The new year could .sec consumer 
expenditure rising by 9 per cent in 
money terms- -the same, as in 1971. 
Also, pre-tax company profits, winch 
rose 9 per cent in the first nine months 
of 1971, should be up alx^ut 15 per 
cent in 1972. Another big stimulant 
will be the budgeted 15 per cent lx)ost 
in total government expenditures. 
Canada’s real gnp should grow 6 per 
cent in 1972 again.st an estimated 
per cent in 1971. Unhappily, this 
still falls slightly short of the 6.5 per 
cent growth rale that the economic 
council recently said v/ould be essential 
if any real inroads into unemployment 
are to be made. With Carnda’s labour 
force growing faster than new jobs, 
unemployment will remain a problem. 
The most optimistic forecast is for the 
jobless rate to drop from the current 
^asonally adjusted 6.6 per cent rate 
to a low of 6 per cent by midsummer. 


Living with hljg^lMn' inf 

Consumer prices. 

% changes on six months before, at annual rates 




i i H 1 I » 1 H 1 1 m 1 11 1.1 1 h 1 I M 1 1 I im 



>(t seasonally adiusted bv OECD 


10 


5 


0 


Benelux ; down 


Brussels 

Greatly dependent on external trade, 
Benelux is wide open to outside 
influences, especially to what happens 
in Geniiany. The Washington agree- 
ment on currencies has cheered 
businessmen only marginally. 

At the recent meeting of 
the Conseil Central de rEconomie — 
the Belgian equivalent of Britain’s 
Neddy — the ministry of economic 
affairs was still clinging to its earlier 
forecast ot a 4 per cent growth rate 
for Belgium in 1972, which is better 
than in tlie past year. The busines.s 
representatives on the council, how- 
ever, could sec no more than per 
cent. 

The Dutch are more gloomy. 
Official forecasters thought in 
September that the real growth in 
Holland’s gnp might slow from about 5 
per cent in 1971 to about 3 per cent in 
1972. Now' some people are talking 
about only a miserly 2 per cent. 

Even before the guilder was 
repegged at a higher rate than The 
Hague wanted, Holland’s competitive 
position was being eroded by large 
increases in wages and prices. This 
erosion looks like continuing. The 
planning bureau reckons net unit 
labour costs in Dutch industry could 
rise by a terrifying lo^ per cent in 
1972, nearly twice as fast as those 
of its main competitors. 



East Europe : a 
mixed bag 

The year 1975, Mr Kosygin told the 
Supreme Soviet in November, will see 
Russia reach the level of industrial 
and agricultural production America 
now has-— which s a long way from 
claiming it will actually overtake 
America in crude output. Even if 
Russia did, it has a population 20 per 
cent larger than America’s and its 
services and infrastructure are still at 
the stage of a developing country. 

However, Mr Kosy^m’s modest 
pride is a fair indicator that the 
Russian economy has gone rather 
better than expected this past year. 
Indeed, the Russians have made small 
upward adjustments to their 1971- 
75 targets, although the growth rate , 
of 39 per cent now foreseen in national 
income over the.se five years remains 
lower than the 41 per ( ent achieved 
in 1966-70. 

In Poland the (Jierek regime, now 
on(‘ year in office, is trying to raise 
the growth rate to 6^ or 7 per cent 
from the feeble levels that char- 
acterised the later years of Mr 
(lomulka. Simultaneously it plans to 
divert more resources into liousing and 
consumer goods (the recent deal with 
Fiat for producing a small car is one 
sign of this) and to scrap Mr 
Gomulka’s over-hopeful goal of self- 
sufficiency in grain. There will be less 
reluctance to import food from the 
west, and more use of western know- 
how (as in the big deal with British 
Petroleum to set up a refinery on tin* 
Baltic coast using BP crude). 

Czechoslovakia, aiming at 3 or <> 
per cent annual growth, has still 
not recovered from the disruption and 
low morale caused by the Soviet-led 
invasion of 1968 ; here the economic 
prospect *is heavily affected by whethci 
the Husak regime succeeds in recover- 
ing a tolerable measure of populai 
support. Hungary, with a similai 
growth target, is pressing ahead with 
its four-year-old economic reforms, 
even though it has run into a seven 
foreign trade deficit, Hopes arr 
pinned on a more rigorous supervision 
of new 'investment projects by tin 
banks and a policy of letting inefficient 
firms go to the wall. East Germany, 
the most developed member of thr 
group forecasts an even lower growth 
rate for the 1971*75 plan period, ol 
4.7 to 5.1 per cent a year. Even 
this may be optimistic, for it is still 
suffering from a shortage, of power- 




Tin ccbNOMisir January 

Ruimanta and Bulgaria are still look- 
ing for annual growth rates of between 
10 and 12^ per cent and 8 and per 
cent respectively, Rumania being 
f rather optimistic. 

To try to escape from a slowing of 
growth in national income, members of 
Comecon ( the commumst trading area 
excluding the Far East communist 
countries, Jugoslavia and Albania) arc 
pinning their hopes on two things. One 
^ is increased industrial co-operation 


BUSINisS OUTLOOK *72 

with the west, although little will be 
achieved unless the communist coun- 
tries stop trying to drive .so hard a 
bargain that capitalist firms lose 
interest (as the Russians found in 
their talks with the Japanese on Siber- 
ian natural gas exploitation). The 
other is increased economic integra- 
tion within the group. But that 
requires more sense being put into the 
various countries’ pricing systems. 
Nor is it clear that the Comecon 


69 

Investment Bank will help to solve the 
problem. As expected, the Hungarians 
are to get finance for their Ikarus 
buses, the Poles for their machine 
tools, and Rumania for a cellulose 
combine. But there is also a lot of talk 
about developing the raw material 
base of the area, and about a 
levelling-up of living standards. Both 
of these suggest that Russia will get 
more than its fair share of what finance 
is going. 


OUTLOOK 

72 


What comes down must go up 

An upturn in American business whets the appetite of commodity investors. 
But metals look like remaining dull. Cocoa and rubber are better specs 


Commod'ity brokers make money not 
„only when prices are moving up or 
down but even when they are still ; 
otherwise there would be many more 
long faces around the London metal 
exchange and Plantation House. For 
The Economist commodity prices 
indicator moved only a marginal 1.3 
per cent in 1971 (end-year on end- 
year) and shows little expectation of 
much movement in 1972. Most major 
commodities are still well below their 
price levels in the late 1960s. This has 
shifted the balance of world trade in 
favour of industrial nations that pro- 
cess raw materials and against those 
less developed countries that produce 
them. Britain is saving £25 million a 
year across its foreign exchanges on 
lower metal prices alone. 

Base metals have led the shift. 
Copper, which has a weighting second 
only to oil in world trade, dropped 
below £400 a ton in 1971 as surplus 
■itocks piled up to a record level. Those 
who swear by charts will forecast a 
ro$y future for metals from our graph. 
But the next 18 months will 
liring an increased world copper pro- 
duction of around half a million tons, 
.IS ambitious projects planned two years 
ago when the price was £700 a ton 
come on stream. It will take an 
unexpectedly large industrial recovery 
to mop up this extra metal. Copper, 
therefore, is unlikely to move rriuch 
cither way from its present price of 
^410 a ton. For below £400 many 
mines become unprofitable, syhile at 
above £450 new supplies can be made 
quickly available. I'he old days when 
copper varied 40 per cent in a year 
may therefore be over for a while. 
If copper can now enjoy the relative 
stability of the other base metals it will 
Ijonefit producers and consumers alike. 

But '^{9 72 looks like being an equally 


unexciting year for speculators in the 
precious metals. Gold, now halfway to 
being demonetised, is unlikely to move 
by more than 5 per cent either way 
from its present free market price of 
$43 .5 an ounce and, with currencies 
at least temporarily stable, will not, in 
the next 12 months, seem an 
attractive hedge. Silver, which is the 
commodity in which priv'^te investors 
most commonly dabble, has an equally 
gloomy prospect. Nothing has stopped 
the steady two-year decline in silver 
prices to which the dollai’s devaluation 
has, for European holders, added a 
further twist. At least a bottom point 
of 125 American cents an ounce has 
been fixed ; that is the level at which 
the American Treasury has agreed 10 
buy new production. But there is so 
much speculative silver waiting to be 
liquidated at the smallest price rise 
that there is litde scope for a revival 
in the metal. If Wall Street’s equities 
continue to move ahead few investors 
will want to be caught in silver. 

Metals are traditionally the most 
erratic of commodities, but this year 
no sector has moved so much as fibres 


which have gone up by 18 per cent 
on The Economist indicator after six 
years of gentle decline. The Indo- 
Pakistan war sent the price of jute to 
the high level of £152 a ton from 
which it is certain to come back in 
1972. But the fibres index is likely to 
remain high, because Australian wool 
prices have finally begun to make a 
firm recovery from 20-year low.b. 

Although cocoa has sunk 34 per 
cent on the year to £185 a ton, the 
prices of tea, coffee and sugar have 
all improved. I'he usual cyclical 
pattern of these commoditie.s .suggests 
that cocoa may be the best investment : 
certainly it has the most scope for 
recovery. Cocoa prices only two years 
ago were as high as £38^^ a ton. 
Rubber also seems a good speculative 
choice. At 14.2P a kilo rubber is 
unusually low ; surplus stocks are 
now disappearing with the return of 
Chinese buying, while synthetic rubber 
is becoming steadily more expensive. 
Any industrial recovers' quicklv boosts 
demand for rubber ; the price could 
rise rapidly to its old levels of around 

27p. 


Commodity prices The Economist Indicator 1963»100 





70 


• «-Tr ' 1 - .,rr 'T ■ ijr^l fT'i'f'" 

titti BtiKumictolr jAtiiMlnr i, 


BUSINESS Britain 



There s nothing much doing in the City so / may as well go to the sales 


How many days has a holiday? 


No one knowb how many days’ holiday 
Bnlish workers really get and for the 
moment no one cares England has 
fewer c>fhcial holidavs than almost 
every other country in Europe (and 
Scotland has one day fewer still) , that 
mudi IS geneiall\ accepted But what 
about the 1 u( sday after Christmas, 
which the Department of Employment 
suggested mdustrs might treat as an 
extra day off unless 

local custom, the needs of individual 
undertakings, the preference of 
employees or other ^nal cire umstanc < s, 
including agreements alreadv made, mi\ 
indicate anothci date 

The civ"il service, mans retailers and 
much of industry took the day oft, 
although other shops decided it woulcl 
be a good dav to start their ^ales and 
pulled m the crowds accordingly The 
Stock Exchange was open but empty 
On Wednesday, the sales were in 
full swing Whitehall was conscious 
if not actually bu/zmg, but much of 
industry still had the holiday spirit 
The National Economic Development 
Office was still shut and so were a 
great many mines which, bv adding up 
an accumulation of rest davs, arc going 
to stay shut all the week Peace moves 
to prevent die mincirs’ strike due to 
stai^t on Monday week were suspended, 
too. The office MS were back at 


Perkinis’ diesel plant, but the plant 
Itself wa’H still idle The rule of thumb 
seemed to be ithat big companies, in 
big industries, were back to normal 
while vsmaller companies found it 
cheaper, as well as simpler, to close 
down for the w<hok week and let their 
staff get over Christmas and the New 
Year in a angle hangover That 
marked them out as potentially good 
Europeans , it is precisely what the 
common maiket headquarters in 
Brussels dtd 

This IS an arbitrary and not a very 
fair methcxl of distributing one of the 
most cherished fringe benefits that a 
worker can have Why should traffic 
wardens have had to turn out in some 
provincial towns on Wednesday, but 
not in others ^ Will they get the option 
of another c’ay off some time later in 
the ycar^ Some of British Rail's drivers 
were very upset when they were told 
they could not work overtime Primi- 
tive man felt the need for a mid- 
winter orgy to keep his sanity during 
the dark, cold days, but 1972 man is 
better equipped, light-and-heatwise, to 
survive them and quite a lot of people 
might prefer to trade the extra days 
tney have taken off this week for others 
when skies are brighter 

Since the Treasury deals with bank 
holidays, the Home Office controls 


religious holidays like Good Friday, 
the Depanmen t of Trade and Industry 
fixes dates for the spring and autumn 
holidays, the Department of Employ- 
ment supervises workeis’ regular 
annual holidays, and the Foreign 
Office watches European holidays, the 
British worker is not likely to get much 
coherent advice from the Government 


A modest rush 

And was it, after all that, such a good 
shopping Christmas The reflex 
reaction of retailers is to say that it 
was, although a few do sav that it 
was better tlian tlicy expected and 
they had not been expecting very 
much A straw poll suggests that sales 
might have been up by an average of 
12-15 which, allowing for the 

g per cent rise in prices that has taken 
place since last Christmas, suggests only 
a modest increase in volume There 
were some spectacular exceptions The 
John Lewis Partnership, spread across 
the country, estimates its sailes were up 
per cent , Maples, that its were 
up 22 per cent. 

Both sound as if the boom in furni- 
ture and household equipment that had 
been building up fairiy slowly since 
hire purchase controls and purchase tax 
were relaxed in July, had picked up 
momentum just when the seasonal wave 
of Chnstmais spending began. This 
would explain the relatively small rise 
in the bank notes in dircuiation over 
Chnstmas At just under £4 billion, 
this is only 6 per cent more than it was 
over the previous OinsUnas, not realiy 
enough to pay the higher prices The 




«n mtmtsmst jAMtrAinr i, 197a 


BUSIMBSS : miTAIN 


V 


difference is not wholly made up by the 
growing use of dieques and credit 
cards ; both the shops and the banks 
say ihait the explanation is that much 
fOnnstmas shopping was done on hire 
purchase. It was, in other words, out- 
side the nonnal seasonal pattern. 

Unemployment seems 'to have hit 
this kind of diopping less than it has 
hurt food sales. In Cardiff, one depart- 
ment store was frankly astonidied that 
its sales were 20 per cent up and in 
Leicester, the big Co-op store was 
reporting the same kind of increase 
(ihe Co-ops were less optimistic in 
London). But food sales Showed a 
regional pattern that closely followed 
the pattern of unemployment. Volun- 
tary grocery chains like Spar- Vivo, 
which know what goes on in the comer 
shops, found sales only Tnaiginally 
ahead of inflation in towns like Hull 
and Newcastle, but anything up to 15 
per cent up on last year’s in the fatter 
home counties and in Manchester. But 
it was a slow start i most Christmas food 
buying was put off until the last week. 
So was some other diopping. Eaily in 
Christmas week, British Home Stores 
had begun to >^ink Ghristmas would 
end rather drearily. Then the customers 
piled in at the end of the week and 
trade now looks like being 15 per cent 
up. 

The January sales, some of which 
began on Christmas Eve, give some idea 
what the Chri.stmas dioppers did not 
buy. Rails of winter coats are selling at 
half price in shop after shop. In some 
boutiques, they are selling well below 
cost ; this has been a tou^ winter for 
small, specialist shops. Fmezers, which 
were said to have been up in the front 
of the Stopping spree, were being cut 
hy a third in so many shops that it 
looks as if retailers are trying to unload 
as much purchaise tax-paid stock as 
posnble before the Chancellor uses the 
regulator to trim a bit more off pur- 
c'hase tax. This he is expected to do 
faiily soon, if only to avoid a buyers’ 
strike during the next three months in 
the hope that tax cuts might come in 
the budget. The televidon and radio 
H‘ts bought in specially for the sales 
are most probably on sale-or-retum, 
under which the retailer pays purchase 
tax only after he makes a sale. A com- 
mon anxiety not to be caught holding 
highly-taxed stock abo seems to be 
behind cuts of up to 50 per cent in the 
pric^ c( cosmetics, something new to 
the shies. The dioppers were lapping it 
Up. What is more, they were paying in 
huge wads of mUtes. Dhe sh<^ asshtt- 
anti were astodrfied. No one bed 
paid like that before Christmas. 


Shipping 

Sour charity 

The Chamber of Shipping is appealing 
for more subsidies again, but the 
Oovemment should not necessarily 
Share its alarm. The British fleet’s pro- 
portion of world Ship orders has 
certainly dropped from 12 to 5 per cent 
dnee investment grants were alxAished 
a year ago. However, there are sound 
commercial reasons for the fall. Ships 
ordered now will almost certainly be 
delivered on to a market glutted with 
capacity. British shipowners have not 
been making the profits they expected 
on the ships they bought during 
Labour’s spending spree : container 
ships, for example, have mostly proved 
a financial disaster. Also, as productivity 
rises, fewer ships are needed to handle 
the same cargo. A container ship may 
do the work ^ four conventional slups. 
So numbers must inevitably decline. 

British shipping can hardly claim to 
be underprivileged when it still enjoys 
free depreciation. The beauty of free 
depreciation as a stimulus is that it is 
worthless unless your companv is profit- 
able, and shipownen are having to 
learn how to sail riiips for profit instead 
of for the fun of it. This is just what 
the abolition of investment grants was 
meant to do. The trouble is that by 
acting unilaterally the British Govern- 
ment threw away a valuable card for 
negotiating an international abdition 
of subsidies, without which capacity 
wil never be brought imder control. 

Cars 

A public Rolls 

Early in the spring Rolls-Ro^e 
(Motors) is expected to go public, with 
a £2j million profit behind it on a 
turnover of £35 million and after its 
best selling and most profitable year 
ever. This has for some time seemed 
the better solution to the Rolls-Royce 
receiver, Mr Rupert Nicholson, than 
selling off the company to the 
highest bidder. Those who were anxious 
to buy it were after its diesel engine 
section, which now has some of the 
most advanced research on Wankel 
rotary diesels for trucks. This sort of 
buyer was almost certainly not going 
to be able to keep the car side of Rolls- 
Royce going, but then neither were any 
of the motor manufacturers who also 
showed an interest in it. 

Making Rolls-Royce cars is a pecul- 
iar business that bean about as much 



relation to ordinary motor manufac- 
turing as yacht-building docs to turning 
out giant tankers. Its proper place is 
in the leisure industries. 'ITie .scale of 
production is absurdly small by nias.s- 
production standards : a 1971 output 
of 2,270 Rolls-Royces and Bentleys, and 
a planned 1972 one of 2,600. It was 
impossible to see British Leyland mak- 
ing a go of a market like this, at 
£14,000 a car, and no other motor 
company was likely to have been 
allowed to buy the car factories 

Trade umons 

Seeing red 

Some trade unions are beginning to 
see openings for turning the Industrial 
Relations Act to their own advantage. 
In the National Union of Seamen the 
leadership has been using it to bash 
the communist militants. The secre- 
tary, Mr William Hogarth, got his 
members to agree to register under the 
Act, which they did in October. Now 
he has pointed out that the union’s 
rules will have to be changed to comply 
with the Act, which is perfectly true, 
but Mr Hogarth’s changes go well 
beyond what is strictly necessary and, 
in doing so, will tilt the balance 
against the militants. If the changes 
are approved at the union’s summer 
conference, no seamen’s strike could be 
called in future without a ballot of all 
memben. Had such a rule been in 
force six years ago, the crippling strike 
of 1966, which Mr Wilson blamed foi 
the start of all his subsequent economic 
troubles, might not have happened. 

But not all changes induced by the 
Act will necessarily go in the 
moderates' favour. Oommunists have 
been banned from holding office in the 
Electricians’ and Plumbers’ Union ever 
since the ballot scandal. But the 
regfistrar, Mr Robert Keith, could 
decide that the ban is undemocratic. 
Since the electricians have so far 
stayed on the register they face the 
possibility of having to Hft the ban and 
risk the communists getting back. 


■'V , 


tkk- 19 ^' 


International 


72 


BUSINESS 


Surprise, surprise, the 
dollar's strong 


Most countries 'have by now declared 
their new exchange rates to the Inter 
national Monetary Fund. In the table 
below we show a selection of them. 
Three strange bedfellows — South 
Africa, Ghana and Jugoslavia — liave 
declared new parities . that is to say, 
expressed their new rates in terms of 
gold. The others have not done so, but 
have defined new central or middle 
nates in terms of the dollar. The latter 
rates can be. changed without getting 
formal permission from the IMF \ 
apart from that, the choice makes no 
odds. The question of whether Presi- 
dent Nixon does, or does not, eventu- 
ally ask Congress for the increase in 
the price of gold becomes more and 
more academic. 

Most of the sterling area countries 
have not gone down all the Nvay with 
the dollar. Even India has not done so 
(although Pakistan has). South Africa 
has devalued nearly 5 per cent agaiinst 
the dollar, but that affects Britain far 
more than it does the United States. 
Hongkong is one of the few sterling 
countries nor to have devalued against 
sterling in some degree. Nobody yet 

New central rates 

% changes from May 1, 1971, parities 

Against $ Against £ 


Japan +16.9 + 7.6 

Switzerland +13.9 + 4.9 

Germany +13.6 + 4.6 

Austria, Belgium, Holland 

+11.6 + 2.8 
Britain, France, Hongkong, Spain 

+ 8.6 — 

Denmark, Italy, IStorway, Sweden 

+ 7.5 - 1.0 

Turkey + 7.1 - 1.3 

Austrafia + 6.3 — 2.1 

India + 3.0 - 5.1 

United States, East Africa, Greece 
Pakistan, Israel — — 7.9 

South Africa* - 4.8 -12.3 

Jugoslavia* -11.8 -18.7 

Ghana* -43.9 -48.3 

*New parities 


has done the final sums of the dollar’s 
effective average devaluation, although 
it lcx)ks as if the initial guess of g per 
cent against the world mix of other 
currencies will be about right. But the 
continued floating of the Canadian 
dollar gives a dash of uncertainty any- 
way. 

EEC 

Farm squabbles 

Brussels 

The Christmas scrap over maize, shows 
how difficult it is to run the European 
Economic Community’s fairm policy 
without fixed exchange rates between 
the member countries. When the 
Germans and Dutch floated their 
currencies upwards in the summer they 
raised their import duties on farm 
imports to maintain the local prices of 
these imports and to preserve the 
margin of preference enjoyed by 
imports from other EEC countries over 
those from outside. 

After the Washington currency 
settlement it made sense for the 
Italians and French to follow suit, 
otherwise American grain exporters 
would have gained an advantage. But 
while attention in Italy was concen- 
trated on the presidential election, 
Italian officials saw an opportunity to 
escape from commitments in an earlier 
package deal, whereby Italy’s maize 
imports from America are made dearer 
than those from France ; the Italians 
therefore refused to apply new taxes to 
counter the effect oftthe dollar devalu- 
ation. 

The French immediately treated the 
matter as a major political issite, 
demonstmting once their sensi- 
tivity to the slightest attempt to tinker 
with the farm policy or to erode their 


hard-won gains in earlier ban^nii^. 
A pronouncement from the £lys£e4 
(where M. Pompidou is becoming 
increasingly aware of the farm vote as 
the parliamentary elections approach) 
thundered that the farni policy was 
untouchable. Chastened, the Italians 
climbed down. The necessary border 
taxes will be applied. 

This same French sensitivity — ^which 
treats every detail of the farm policy^ 
as an issue of principle — has been*'^ 
giving British negotiators a hard 
time. Britain gave a general commit- 
ment to phase out deficiency payments 
to its fanners. At French insistence 
this has now been elevated to a 
matter to be supervised annually and 
in detail by the council of ministers. 
The Six have agreed on the various 
rates of border taxes to be applied on 
cereals, semolina, etc (the sensitive 
items) until the dollar realignment is 
settled formally and a new “ green ” 
unit of accouirt can be worked out. 
The farm policy will lumber on — 
until the next currency changes. 

Pakistan 

Whose debts ? 

Karachi 

Pakistan has lost 40 per cent of its 
gross national product and 60 per cent 
of its population. The first casualty 
•from this considerable shrinkage will 
be the armed forces, which consumed 
60 per cent of Pakistan’s combined 
revenue budget of $280 million in 
1970-71. Without the east wing fewer 
resources will be available for defence, 
with the impact likely to be felt most 
severely in dte Punjab, where the army 
was predominantly recruited. 

As for industry in the west, despite 
talk of damage from the loss of its 
maricets in the east, the fact remains 
that these markets had been slipping 
away progressively ever since the crisis 
began nine months ago. The result 
has been greatly increased efforts by 
Pakistani firms to find export markets 
iiutead, wifii the result .that, exporu 
from the west have been |>itiihed 3^ 
per cent above 1970: levels.' 






Back to that old gun-making 


However, the west now faces the 
. loss of foreign exchange earnings from 
jute ; it will have to pay hard currency 
for tea, jute goods and paper ; and 
there is little prospect of any new aid 
so long as the moratorium on debt 
repayments continues and the rupee is 
not devalued. Even more controversial 
will be just how these debts are to be 
allocated between Pakistan and Bangla- 
desh. The argument goes to the 
very roots of east Bengal’s original 
grievance : that it earned the foreign 
exchange, which, was then spent 
chiefly in the west. 

In his busy two weeks since assum- 
ing power, Mr Bhutto has made one 
significant move on the economic front, 
by demanding the return to Pakistan 
of the capital held abroad by 
Pakistanis. Thanks largely to persis- 
tent political instability, . the flight of 
capital has reached astronomic propor- 
tions in recent years ; total holdings 
abroad could be around $!2ioo million. 
Calling it “ the blood of Pakistan,” Mr 
Bhutto has ordered it to be returned 
and has impounded the passports of 
members of the 22 richest families, not- 
ably the Saigols, the Dawoods and the 
Adamjees, threatening to “ take host- 
ages ” if the money is not repatriated. 


Airlines - 

Worst year ever 

It was a real, across-the-Jboard slump. 
Now it is becoming possible to see just 
how many passengers must have fled 
the scheduled airlines and their high 
fares for the charter operators and their 
low-low ones, for the scheduled airlines 
have just come through their worst 
12 months since the International 
Civil Aviation Organisation began 
keeping records in 1945. To the airlines 
a bad year is one in which traffic grows 
by II per cent, and in a really good 
one growth can exceed 19 per cent. 
Passenger traffic in 1971, after making 
every allowance for distance, was just 
3 per cent up and it is necessary to go 
back 14 years, to find another 12 
months anything like as bad. 

The airlines will blame this on the 
economic setbacks in America and 
Europe, on almost anything, in fact, but 
their own policies. It takes a long time 
for returns to come in for charter traffic, 
so ICAO has no idea yet how they have 
been doing, but it is certain that char- 
ter operators are taking well over 20 per 
cent of North Atlantic traffic and as 
much as 40 per cent of it on some 
routes — like those to Germany. 
Scheduled airiines are increasingly set- 
ting up their own charter companies to 
get back with one hand the traffic that 
they are losing with the other. By 
making only token cuts in fares, they 
have made almost certain that the 
charter operators will walk away with 
the business again in 1972. 

Argentina 

Broke 


Argentina’s request to have its foreign 
debt rescheduled comes on the heels 
of Chile’s decision to do <the same. 
For Chile, the immediate blow has 
been the slump in the copper price. 
Argentina’s problems are more 


73 

complex. Inflation gathered pace in 

1970 to an annual rate of over 20 
per cent, accelerating still more in 

1971 to an annual rate of 40 per cent 
by mid-year. Partly because of this, 
and partly because of political uncer- 
tainties, there has been a flight of 
Argentine capital abroad : the central 
bank president reckoned in November 
that $i billion had left the country in 
the preceding 12 months. 

Although the peso had been 
repeatedly devalued by small amounts 
in the early part of the year, the gov- 
ernment eventually introduced the 
present two- tier system. Under this, 
part of each foreign exchange trans- 
action is made at the ” financial ” rate 
and part ^it tftie (higher) ” commercial ” 
rate. By increasing the percentage that 
must be carried out at the financial 
rate, it has, in effect, brought about 
a further devaluation, but still nothing 
like enough to reflect rising internal 
costs and prices. The result has been 
a sharp deterioration in Argentina's 
balance of trade. In the first half of 
the year Imports were 21 per cent up 
and exports 13 per cent down. Foreign 
companies have been obliged to borrow 
only from abroad. This means they 
have been buying pesos in the spot 
market and selling them forward, lead- 
ing to a build-up of short-term foreign 
exchange liabilities. 

Because the peso has been consis- 
tently overvalued, exporters* earnings 
have been pared to the bone. Rather 
than favour them and the cattle-owning 
interests by adequately devaluing the 
peso, the government lias instead been 
subsidising Argentine-owned meat- 
exporting and packing houses. Even 
so, meat exports in the 1 1 months to 
November were down from 605,000 
tons (1970) to 378,000 tons (1971). And 
the giant of the industry, Compania 
Swift de la Plata (owned by Deltec 
International, a largely American- 
controlled company based in the 
Bahamas), was forced into insolvency. 
Swift in September worked out a deal 
with its creditors whereby they would 
be repaid over four years, but the 
court rejected the scheme, ordered the 
government to appoint a receiver, and 
required Deltec’s other local assets to 
be used to pay the creditors. Swift is 
appealing, but the nationalists are 
cock-a-hoop. The incident is ominous 
for Argentina’s meat-exporting industry 
(given the indifferent record of the 
state-owned meat packing firms), and 
for Argentina’s hopes to attract foreign 
investment in future. Nor has it 
created the ideal atmosphere for 
renegotiating Argentine debts. 


Key indicators; world commodity prices 


Doing things by haivst 
Ghana davatued its currency by 49% 
against starling this weak, bringing 
down cocoa prices in its wake to £18S 
a ton. Cocoa producers wilt get paid 
substantially higher pricM which will 
encourage production. But since much 
of the industry's equipment is imported 
the devehjatkm is unlikely to de much 
for Ghana’s bejence of peymenu. 


Index Percentage 

1963=100 change on 

Dec Dec one one 

22 29 month year 


Ail items 121.1 121.7* + 3.9 +1.3 

Food 136.2 137.1* + 6.6 - 0.1 

Fibres 90.2 90.4* + 3.2 +18.5 

Metals 172.5 172.9 + 1.4 - 4.9 

Misc 101.1 101.0* + 1.Ci - 6.9 

*f4ovfsfarMf 



74 





BUSINESS 


Investment . 


1 


Will Wall Street accept 
direct rule? 

New York 


The Securities and Exchange Commis- 
sion submitted to Congress last week a 
request for new, broad regulatory^ 
powers which, if approved, would 
significantly alter the present system of 
market regulation and subject Wall 
Street increasingly to direct rule from 
Washington. Since the 1930s securities 
acts established the present scheme 
of co-operative regulation, Wall 
Street — meaning mainly the New 
York Stock Exchange — has retained 
the responsibility for making rules for 
its own member brokers and disciplin- 
ing them for any infractions with 
minimal interference from the SEC. 
In a far-reaching redefinition of its 
duties, that agency now seeks, among 
other things, broader power to dis- 
approve or alter rules proposed by 
stock exchanges and the right to 
review’ and modify disciplinary actions. 
The SEC seeks, in addition, to take 
over from the exchange direct super- 
vision of stock certificate depositories 
and procedures. It could simply be 
anticipating similar measures Congress 
has been expected to initiate on its own 
after investigations of the securities 
industry under way on Capitol Hill 
since early 1971. 

Be that as it may, last week’s SEC 
recommendations came rather as a 
surprise to brokers who had keen wait- 
ing for the regulatory agency to 
declare its position on two entirely 
different controversial issues that have 
been wracking the industry'. These are, 
first, whether institutional investors, 
notably investment management and 
insurance companies, should be 
allowed to own seats on the all- 
important N^ew York Stock Exchange 
(which unlike most of the 13 American 
exchanges still has strict rules barring 
institutional membership) ; and, 
secondly, whether the present fixed 
commission rate scheduled on listed- 


transactions should be further modified 
so that the present requirement that 
brokers negotiate their fees with cus- 
tomers on trades of $500,000 or more 
should be reduced soon to a lower 
breakpoint in the $350,000 to $400,000 
range. The SEC recently completed 
more than six weeks of hearings on 
these and other suggestions to reform 
and restructure the industry, and, now 
that everyone else has had their say, 
the SEC is expected to state its 
position by no later than mid-January. 

The expectation is that on the 
question of permitting financial institu- 
tions to own their own NYSE seats 
the SEC will rule in favour of such 
memberships, but in a way that will 
prevent the institutions from enjoying 
lower preferential fees as a result of 
the arrangement. On the contrary, it 
is expected that such brokerage sub- 
sidiaries will be required to engage 
only in a general brokerage business 
and be explicitly prohibited from 
handling transactions of the parent 
concern. From the SEC’s point of 
view, this solution has a Solomon-like 
appeal. While the institutions would 
seem to have prevailed because they 
would then be allowed to own seats, in 
actual fact they will have gained little 
beyond the opportunity to finance the 
operation of additional public broker- 
age houses. Under such an approach, 
to be sure, existing brokers will face 
increased competition from more 
broker members — ^but they will be 
vying for a larger pool of business than 
they could if an institution could set 
up a brokerage subsidiary to recapture 
its own commissions. 

On the question of negotiated rates, 
the expectation is that the SEC will 
not even give the illusion of retreating 
further from the fixed commission 
schedule. There is widespread alarm 
among brokerage houses that a too 


rapid lowering of the cut-off could 
severely pinch their revenues and ^ 
profits, and possibly set off yet 
another financial squeeze. The SEC 
seems sensitive to this contention, and 
is expected to resist a further drop in 
the negotiated rate cutoff until the 
operations of the present $500,000 
breakpoint have been properly put tb 
the test. 

Markets 


I'm a jolly broker 

London’s idea of a happy new year 
was an index at its highest for 2^ years. 
No one was over-concerned by the fact 
that the rise, nearly two points up on 
Tuesday, when there was hardly a soul 
about, and nearly 8^ points on Wed- 
nesday, when the brokers came rolling 
back in rather greater numbers, was ^ 
based on not much more than half the 
recent volume of business. The holi- 
day mood began wearing off a point or 
so by Thursday, by which time the 
absentee rate was down to around 10 
per cent and the market closed down 
with the index at 472.8. This is 
remarkably good, considering how 
sharp the week’s rise has been, and 
shows that London’s institutional 
buyers still feel there is only one wa\ 
to go, and that way is up. 

In New York, where a lot of brokers 
were back in their offices by 8.10 on 
Monday morning, they had more news 
to ponder about. There was the 
resumption of bombing in North Viet- : 
nam to take into their calculations, j 
and, by the time they had done that, | 
the bombijTfg was called off and the | 
sums had to be done all over again. , 
But w'haL were really being taken 
seriously were the possibility of further 
cuts in the prime rate, the rise in the 
economic indicators, the end of the 
tax-loss period and signs of an upsurge 
in capital spending. By Wednesday the 
Dow Jones was up 12^ points on the 
previous Christmas, to 893.6 but, in 
London, ITiursday loqked a niore 
sober day. By lunch the index had 
dropped nearly four points.^ , 






tliib i, 1972 


BUSINESS : mvltSTMENt 


75 


Sensibly, the Japanese market 
closed down for a week on Wednesday, 
after days of hectic speculative trading 
had lifted the new stock excliange 
•index to 199.45, only 10 points off the 
1971 and all-time high. Trading 

companies, which it had been said 
would lose heavily from the yen 

revaluation, like Sumitomo Shoji, 
Mitsui and especially C.Itoh, went up. 
The shipbuilding companies, scheduled 
to lose $900 mn on fixed dollar 
contracts, went sailing up too — IHI 
untypically high on the list of active 
slocks and leading the fleet. The 

market decided, in a rush, -that the 
revaluation had been ovcrdiscounted. 
Anyway the trading and shipbuilding 
companies had sold dollars forward 

on a massive scale. Even shipping, with 
talk of dividend cuts next year, 
zoomed up, fed by speculative rumours 
of links here and deals there. Japan 
Line closed at Yen 221 compared with 
a 1971 low of Yen 50. Money is run- 
ning out of people’s cars. On the 
Osaka market, Nippon Dream Kanko, 
an amusement company that has never 
paid a dividend, has been a hot stock. 
But some time in the new year the 
dream mav be cut short. 

Preference shares 

Tax speculation 

One of the more innocent speculations 
in the market is whether preference 
shareholders will make a windfall gain 
from the corporation tax change in 
April, 1973. At present preference 
dividends are paid out of income that 
)ias borne corporation tax, and the 
company is also responsible for deduct- 
ing income tax at the standard rate 
from the dividend. So a 7% dividend 
IS woi%h only 4.3% in the hand of the 
shareholder. Under the French system 


of corporation tax, the corporation 
tax rate would be 50%, but dividends, 
including preference dividends, would 
then be distributed free of income tax. 
Thus a 7% dividend would be equiva- 
lent to a gross 10% one. 

A variant of the French system is 
one of the two alternatives under 
consideration for Britain in 1973. 
This, the so-called “ imputation ” 
system, appears the most likely to be 
adopted, but, unfortunately for 
preference shareholders, it has 
the side effect of making the windfall 
very unlikely. For the revenue, instead 
of 'treating corporation tax as an 
advance payment of the income tax 
on dividends, wants to count the in- 
come tax on dividends as an advance 
payment of corporation lax, leaving 
things as they are now. 

Not that the full value of preference 
shares under the present rules is 
being exploited by companies even 
now, though the advantage of be-ing 
able to treat the dividends as franked 
investment income has been known 
since 1965. Thus, the 7.9% yield on 
Imperial Chemical Industries’ 5% 
preference shares is equivalent to 13% 
from a debenture, because the deben- 
ture yield would be taxable at the 
corporation tax rate of 40%, as would 
ordinary trading profit. So any firm 
not expecting to earn 13% or more on 
its assets would do better to put its 
shareholders’ money in preference 
shares— except that there is only a 
narrow market for them, since they 
are only about i % of the issued capital 
of British companies. 

Metro-Goldw^nJ^^ 

Topper's trumps 

Every movie company is only just 
as good as its last movie. And Metro- 
Goldwyn-Mayer s latest — The Boy 
Friend — is, judging by two weeks of 
reviews and business, a hottie. And 
a cheap, made-in-Britain (starring the 
skeletal Twiggy) one too. At a cost of 
$2.1 mn, shared with Britain’s EMI, 
it is so far a cry from the Hollywood 
musicals of yesteryear that it is bound 
to make a profit. 

The new, revived MGM has had a 
miraculous turnround over the past 
two years, and the figures for the first 
quarter of the 1972 year show the 
improvement is continuing : net 
income is $2.5 mn versus $2 mn. As 
Mr James Aubrey, president and chief 
executive (or as manage- 


iiierit moguls arc now called) explained 
to the New York investment analysts, 
it is possible to make a profit without 
making a hit as long as the business is 
run like a business. In the process he 
has upset a lot of producers, artists and 
film historians. But he has rescued the 
company from the verge of bankruptcy. 

The stock market rernains sceptical. 
The trouble is the brooding presence of 
Mr Kirk Kerkorian, now bidding to 
increase his share of the equity from 
40 ‘X> to 44%. No one likes a single 
donvinant share-ho'lder, especially when 
the company buys out some of hi.s 
private interests, as has been done 
recently to build uj) a huge site in Las 
Vegas where a $75 mn hotel — 
Grand Hoter’— is to be 
built. Neither do the sceptics .see how 
MGM, still with a weak balance sheet, 
can take on more debt for this venture 
as well as for another one even more 
uncinematic — the building of three 
cruise ships at a cost of approximately 
$54 mn. 'fhe leisure-showbiz concept 
is right, hut the liming wrong, and the 
estimated cost of the ships on the low 
side ; even 80% financing will entail 
casli and interest payments. However, 
at $19, the price of Mr Kerkorian's 
offer, the guessed p/e is a Twiggy'- 
sized q. 


Twiggy (right) : not exactly Hollywood 






76 


THE BCONOMtBT jAMVAky I, 197a 


APPOINTMENTS 


ITie Polytechnic of 
North London 

DEPARTMENT OP 
OEOOHAPHY 

RE^ADVFMTISEMENT 

Lecturer (Grade II) in 

Applied Economics 

This 16 u nf*w and challenftlng 
post rrt*ated to prepare tor the 
introduction ot tntcr^disdplln- 
ary decree courses. 

Applicants must be highly 
quallfled in their field with 
appropriate teaching experi- 


ence and they vriJl be expecufd 
to work with several other 
^edahsits in establishing new 
C N A. A courses 

RaJary . l.ectiirc! tOradc ll) 
£2,195-£3,875 (subject to fonnal 
approval) plus London Allow- 
ance £118 

Further details of the post 
(uid application forms may be 
obtained Iroin the IJi^utv 
Secretary, The Polytechnic of 
North Lon<lon. Prince of Wales 
Road, N W 5, on receipt of a 
stamped addr<>88ed foolscap 
cnvcloiH* 

Applications sliould be re- 
turned within 14 days of the 
appearance* of this advertise- 
ment 


Classified 

Advertisement Rates 

Lineage £0.60 per line 
Display £10.00 per 6.c.i. 
Maaaieaieat Appeiatneate Page 
(salary over £7,000 p.a.) 
special position— i page 
minimum £480 per page and 
pro-rata 

Preparty Papa special position 
— 4 page minimum £440 per page 
and pro-rata. 

Box number provided free of 
charge. 

Latest date for acceptance of copy, 
noon Wednesday. 

Ttltphone JEJ Johnson 01-930 5155 


CHAIRMAN'S STATEMENT 


Jessel Securities 

Limited 


Mr. Oliver Jessel reports on another Record Year’s Profits 


Points from the Chairman's Statement accompanying the Report and 
Accounts for the year ended 30th June 1971. 

# Profits before taxation advanced from £2,360,000 to £4,346,000. 

# Ordinary dividend raised from 35 per cent to 48 per cent. 

# Board proposes a scrip issue of one ordinary and deferred share 
for every eight held, and expects to maintain the 48 per cent 
ordinary dividend on the increased capital, equivalent to 

54 per cent on the existing capital 


Summary of Results 


Year ended 30th June 
1971 1970 


Profit before taxation 

Profit after taxation attributable 
to shareholders 

Ordinary dividend paid 
Earnings per share 
Ordinary dividend 


£4,346.000 


£1,916,000 

£1,163,000 

61% 

48% 


£2,360,000 


£1,288,000 

£672,000 

52% 

35% 


Copies of the Report end Accuunts are available from: 
Jessel Securities Limited 
'fG Finsbury Circus London EC2M 7BX 


The Institute of 

Development 

Studies 

AT THE UNIVERSITY OF 
SUSSEX (BRIGHTON. 
SUSSEX) 

HAS VACANCIES FOR AN 

Economist /Statistician 

A group of social sclentiiU 
workitig with Prof Llpton, com- 
paring atudlea of vlUagea In 
poor countries, requires an 
Eoonomlst/Statlstlciaii as soon 
as possible. ResponslblUtles will 
include (a) statistical anaiysis 
of single village surveys to 
IsolaU* groups ol factors linked 
to specific Job problems, ib) 
economic or other explanation 
of these links and groupings. 
<c) statistical hypothesis formu- 
lation and testing for the pro- 
ject as H whole, covering 
aspects ot iiiter-viliage varia- 
tion in population, migration, 
land use and employment 

Appointment for 1 year In the 
first instance bul almost cer- 
tainly renewable for a further 
2 years. Initial salary £2.000- 
£3,000 p.a f PSSU according 
to experience and qualifications 
Job specification and applica- 
tion form from Derek Wood- 
roffe Closing date for receipt 
of applications Htti January 
iy71> 


Lincoln College 

I UNIVERSITY COLLEGE OF 
AGRICULTURE) NEW 
ZEALAND 


Lecturer/ Senior Lecturer 
in Farm Management 

The Council ot Lincoln 
College invi u>B appUoaUons for 
appointment to the position 
of Iiocturer Senior Lecturer In 
the Department of Farm 
Managemeni and Rural 

Valuation 


The successful applicant will 
jiiiii « large tracking depart- 
ment. with active research and 
cotutuUlng laleTests Experience 
In one of these areas would 
be an advantage, but considera- 
tion will be given to recent 
graduates with good degrees 
Particular Interest would 
attach to candidates with 
experletuc or aptitude In 
agricultural systems research, 
simulation, and computer 
modelling, who would further 
develop InterdlsclpUnary work 
In the College. 

Commencing aalary according 
to quaUfleaUnns and experience. 
The present salary scales for 
academic staff are : 

Lecturer $NZ6.123-|6.653 per 

annum. 


Senior I.ecturer $NZ6,97l- 
$7,863 per annum (bar) 
|NZ8.i02-$6.577 per annum. 

Removal expenses and farm 
of successful applicant will be 
reimbursed up to Mp^fled 
limits. New Zealand Oovsrn- 
ment Superannuaitfon available 

Conditions of appolDtinent 
obta^'nable from the Registrar 
of the OoU^ In Canterbury, 
New Zealand, or from toe 
Association ot Commonw^th 
UnlvMtlss «Appto). 36 Gor- 
don Bquare. LoMon WCIH OFF 
(Tel : 01-387 8573). 

Ag|bUoattons close on St MTarch 




im socmoiiisT jAWAiiy i, 197 a 


77 


APPOINTMENTS 



ECONOMIST 
Corporate Planning 

We are a £200 million international group with 
interests in gases, engineering, metals, food, 
chemicals and distribution. We require an 
Economist to join our Planning Secretarial — 
the team at the Group's centre with responsi- 
bilities for the development and co-ordination 
of long-term business plans. The emphasis of 
the work in this appointment will be to 
strengthen our understanding of the present and 
future interactions of the firm with its environ- 
ments, bearing directly on strategic policy 
advice for top management There will also be 
some shorter-term business forecasting work 

Candidates aged 26 to 32 should expect to 
spend three-four years in this position before 
taking up a planning or line appointment in a 
Trading Division. 

Starting salary is negotiable but it is unlikely 
that anyone currently earning less than £3000 
would have the necessary background The 
usual fringe benefits will apply. 

Please write giving brief details of qualifications, 
experience rind present salary, quoting reference 
S.224, to 


Mrs. C. A. Livingston, 

Head Office Personnel Manager, 
The British Oxygen Company Limited, 
Hammersmith House, London. W6 


BUSINESS 


EUROPEAN COMPANY 
INFORMATION 


Over 50 years of analytical experience have 
gone into our European “ know-how.” Today 
this expertise covers nearly 300 of the most 
significant Companies on the Continent. 

Subsidiary Companies — capital structure — 
10 year accounts analysis AND just when you 
need it most that vital piece of late news — 
all on Extel’s up-dated European Service cards. 


The cost? Just £90 a year. 


Extel Statistical Services Ltd . 

37/45, Paul Street, London, EC2A 4PB 
01-251 0681. 


EAST SUFFOLK COUNTY COUNCIL 
Department of Social Services 

RESEARCH and 
DEVELOPMENT 
OFFICER 

(Salary Grade SO 2— £2766 to £3075 p.a.) 

to monitor effivtiveiness of current serv'iices, priuure 
and process data on need for new sendees and evaluate 
alternative methods of providing them. The successlul 
candidate may be young and will certainly possess 
a relevant professional qualification, sen.sitivky to the 
aims and objex^tives of the scndal services, an observant 
and enquiiring nfind and the ability to apply this 
to the prtHluotion of objective assessments over the 
whole range of the department’s functions. 

Further particulars and application fonns can be 
obtained by contacting Mr I. H. Oillings (Tpswicli 
55801, extension 352) and .should be returned to 
Director of So<dal Services, P.O. Box 36, County Hall, 
Ipswich IP4 2JN. 


CHAIRMAN’S STATEMENT 



Extracts from the chairman’s statement 
for the year ending 31st March 1971 


It gives me particular pleasure to present to you the 
results for the Year Ending March 31st 1971 which were 
achieved despite the most difficuU trading conditions both 
in this country and abroad. In addition, there was a 
significant change in the management of the Company. 

During the period there was a reduction in sales but an 
increase in profitability. 

1 am confident that we can look forward to the 
maintenance of this profitability although wirh the current 
economic uncertainties it would be unwise to attempt a 
forecast any distance ahead. 


1 am, however, very happy to report that up to the 
end of September .this year our sales were approximately 
10% above those achieved over the same period last year. 


Whilst we are encouraging the younger Directors to 
expand the business and indeed they have already achieved 
significant results in this direction, your Board is determined 
to retain the quality of goods and service which have 
together made your Company unique. This is a family 
tradition of which your Company is rightly proud, and 
we will ensure that it is jealously guarded. 

P. R, ASPREY, Chairman 

ASPREY & CO LTD, 

165/169, New Bond Street, LONDON WIY OAR 
City Branch ; Asprey A Birch & Gaydon, 

153 Fenchurch Street, LONDON E.C.3. 







78 


THS ECONOMIST JANUARV i, 


APPOINTMENTS 



CheshireComtyCouncil 


Town Planners/ 

Mathematicians/ 

Statisticians/ 

Systems 

Analysts 

£2,766x£100 

approx -£3/180 


University of 
London 

Leon Fellowship 

Applications are Invited lor 
the Leon Fellowship for 
Research (preferably in the 
fields of Economics or Educa- 
llun) for the Session 10(2-73. 
The Fellowship is of the value 
of not less than £1,200 a year, 
an’l IS tenable In the first 
Instance for one year. It is not 
essential that candidates 
sliould be members of a 
university, but they are 
expected to put forward a 
programme of research of an 
advanced character and to pro- 
duce evidence that they can 
carry It out. Selected candidates 
will be required to attend far 
interview Further particulars 
should be obtained Irtun the 
Deputy Acaiomic ReKistrar, 
University of London (EC^l), 
Senate House. London, WCIE 
7HU. and applications for the 
Fellowship must be received 
not later than 1 February 
1072. 


University of 
Warwick 

Lectureships in 
Sociology 

Applications are Invited for 
the above posts from candi- 

dates qualified in any of the 
lollowlnR fields : SocioluRlcal 

Theory. Social Statistics. 

Social Research Methods, 
Comparative and Historical 
Sociology, Personality and 
Society, and Social Administra- 
tion Salary in the scale 
£1.401-1:3,417 p a . with F.S S U 
StarlmR date 1st OctedM-’r. 
1072. Further particulars and 
application forms may be 
obtained from the Registrar. 
Urdversity of Warwick, Coven- 
try CV4 7AL quoting Ref No 
19/2P/71 Closing date for 
applloaUons 24th January. 1072 


For further 
appointments 
see pages 5, 76 to 79 


The County Planning Department 
(Information and Techniques Division) 
has vacancies for two Principal Planning 
Officers. 

1 . The first vacancy is for the third in 
command of the Division who will be 
involved in, and provide management 
and supervisory advice on, most of the 
projects in the Divisional programme. 
These are briefly the collection, 
processing and dissemination of a wide 
range of data; the establishment and 
operation of data monitoring systems, 
and the use and improvement of the 
urban systems models which play an 
increasingly important part in town 
planning. 

2. The second vacancy is lor an officer to 
initiate and carry out the specific project 
of establishing a method of collecting 
and analysing countryside recreation 
statistics. This will be an original 
investigation and the project is to be 
sponsored by the Countryside 
Commission. 

For neither post is a qualification 'in 
Town Planning essential; versatile 
mathematicians, or economic or 
mathemathical statisticians (or systems 
analysts with the right sort of first 
degree) might ^ell be equally suitable. 
Application forms and further 
information from*.- 
The County Planning Director, 
Confmerce House. Hunter Street, 
Chester CHI 1SIVI. Closing date for 
applications— 10 January. Please 
specify whether applying for either 
or both posts. 


INSTITUTE OF DEVELOPMENT STUDIES 


at the University of Sussex 


DIRECTOR 


The contract of the present Director (Mr Dudley 
Seers) expires in mid-1972 and the Governing Body 
invites applications for the vacant post from men and 
women of any nationality. 

The Institute, which is an autonomous national institu- 
tion, located at the University of Sussex, was established 
in 1966 to carry out research, teaching and advisory work 
in development studies. It is continuing to expand and 
expects substantially to increase its present size by 
1975/6. 

The Director, who should have proven administrative 
ability, a professional reputation in a social science and 
experience of developing countries, is responsible for 
the administration and the academic work of the 
Institute. The successful candidate will be appointed on 
contract normally for five years, with other terms and 
conditions (including F.S.S.U.) simil^ar to those which 
apply to senior posts in UK Universities. 

The salary of the post wilt be negotiated with the 
successful candidate but on present university scales 
will not be less than £6,000 per annum, A Director's flat 
IS available in the Institute building, for which a rental 
contribution is payable by the Director. 

Further particulars are available from the Administrative 
Secretary, Institute of Development Studies at the 
University of Sussex, Falmer, BRIGHTON BN1 SRE, 
Sussex. AH enquiries will be treated in strict confidence. 

The closing date for applications is 29.2.1972. 


THi ECONOMIST JANUARY 1, I973 


79 


APPOINTMENTS 


COURSES 



Financial and 
Economic Research 
in Zambia 

Vacancies exist for Economic-Commercial or 
Financial Research Officers in the newly formed 
State Finance and Development Corporation in 
Zambia. 

The salary with gratuity and allowances will not be less 
than £5000 p.a. and is subject to negotiation. 

The work which is challenging and is intimately con- 
cerned with the formulation of policy and advice at 
a high level offers good opportunities for travel m 
Zambia, Africa and the rest of the world. 

Applicants who possess a degree or professional qualifi- 
cation in economics, business, commerce or banking and 
who wish for a detailed job description should write 
to the Zambia High Commission, 7/11 Cavendish Place, 
London, W.1. marking the envelope "Financial Appoint- 
ments Dept." 


University of 
Warwick 

Readership or 
Senior Lectureship 
in Sociology 

Appllcallo»u» arr Invited tor u 
post of Reader or Senior Lec- 
turer In Sociology Candidates 
may be from any of the main 
fields of sociology but should 
have a sound knowledge of 
theoretical sociology and oon- 
aiderable teaching experience. 
Salary in the scale £3,393- 
£4.401 p a., with F.S.S U 
Starting date Ist October. 
1972. Further particulars and 
application forms may be 
Obtained from the Re^strar, 
University of Warwick, Coven* 
try CV4 7AL. quoting Ref No. 
19/F/'71. Closlrut date for appU- 
caUons 24th January, 1972. 


APPOINTMENT 

WANTED 


AMCmCAN CONSULTANT with 
strong experience m industrial 
deveiepmeni, transportation, com- 
puters, and electronics seeks respon- 
Mbie analysts, market research, 
•■ngineerlng, management develop 
mint or forensic science assign- 
ments. European languages, rtnr- 
trictts. Write or telephone . 


Or. winiam M. Maser 
III tlMlitaiiith StrafI, NW, 
Washifiglaii. OC, USA. 
Taigptkonc; 299^9994967. 


I 


EDUCATION 

Read for a 
Degree at Home 

Succeuful Postal Tuition for 
OCE O and A levels tail Boards). 
London University Degrees. Teachers' 
and Professional exams. Business 
Studies. Gateway Courses for the 
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Graduate Tutors. Fees by instalments 
Wolsey Hall is Accredited by the 
CACC. FREE prospectus from 
Wyndham Milligan, MBE, MA. 
Principal. Department CAl, 

Wolsey Hall, 

Oxford. 0X3 6PR. 

Home Study Tuition 
BSc (Econ) LL.B. 

and other external degrees of the 
University uf London Specially 
prepared Courses for iht FederaWon 
of Stock Exchanges, for Accountancy. 
Company Secretaryship. l*aw. Coating, 
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Also many thoroughly useful (non- 
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Write today for details or advice, 
Btatlnf aubjecu In which Interested 

Metropolitan College 

(Dept. 092), St. Albaus, or 
call at 30 queen Victoria Street, 
London, EC4. Tel. 01-248 6874. 
iFoumlrd 1910.) 

Afioredited kiy the Council for the 
AcNiifditatton of Correipondeiioe 
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8o 


THE ECONOMIST JANtURY I, I972 


This advertispnwnt appears as a matter of record only. 

Nch Ihsuo 

Inter-Amkrican Development Bank 

Washifij^toii, D. C* 

SWISS FRANCS 60,000,000. 

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THE ECONOMIST JANUARY I, I972 


STOCK PRICES AND YIELDS 



Prices. 1971 

High Low 

Ordinary 

storks 

Price. 

Dec 29. 
1971 

Ch.inge 

on 

week 

Yield 

Dec. 

29 



Banks, other financial 



:89 

239 

Algernene Bank 

n 276 

5’* 

6 1 


54 3 

Amiterdani-Roi 

ri 57 . 8 

- 1 

^7. 


240 

Aust & NZ Bank 

276p* 

4 

3 b 

;o« 

60*4 

Bank of America 

$70'. 


3 1 

420 

300 

B 01 Ireland 

395p 


3 5 

955 

700 

B of Monireal 

934p 

10 

3 4 

'16*4 

85 

B Nac do Mexico 

P85 

, 1'* 

7 1 

■75 

290 

B of NS Wales 

328p 

1 13 

2 8 

V30 

337'4 

B of Scotland 

530p 

10 

3 6 

?625 

2310 

B Rruxrllct 

Fi B 2460 

20 

4 8 

iS9 6 

204'* 

B do Pans Pays Bas 

Ft 218 9 

0 1 

4 4 

'i'* 

50*. 

Bankers Trust 

S55‘* 

2*4 

5 1 

^22 

327'* 

Barclays 

S99p 

1 21 

2 7 

1 1*4 

9’, 6 

Can Ifiip C'oni 

f.13'* 


1 2 


48'. 

Charterhouse Group 0Op 

1 

4 8 

61*4 

48'* 

Cinse Manhattan 

$58 

1 l‘* 

3 4 

70 

sr. 

Chemical Bank NY 

SSf*. 

'4 

5 1 

in 3 

196 

ComnH*r7b,iiik 

DM 235 

‘ 0 8 

3 6 

75 

144'* 

Credit Commercial 

Fr 148 

‘a 

3 4 

4>4 

358 2 

Credit horn icr 

Fr 385 

, 10 

4 4 

io95 

3035 

Credit Siiisse 

Fr S 3695 

105 

2 2 

j;i5 

281 

Deutsdie Btnk 

DM 314 

3’* 

2 9 

.85 

2I5’» 

Dresdnor Bank 

DM 272 


3 i 

1' 

33 

Firs' Nt'i City 

$45*4 


2 9 


210 

Fuji 

Y 355 

■ 23 

! 7 

'B5 

712'a 

H.imhius 

338p 

3 

2 2 

‘j2 

72 

Hill Samuei 

l4Sp 

, 3 

2 6 


1'* 

105 I'lgiii 

$1*4 



i/'. 

9*1 

Hongkong A Sh 

6'5’s 

1 I'l 

2 2 

46 

73 

Klcnwort Denson 

I36p 

) 2 

2 2 

(’lO 

5300 

K'cdiutbank 

fr B 5780 

50 

i 2 


259 

kundcrikrcdit 

DM 344 

. 7 

2 9 

■430 

1680 

1 amben LTnd 

Ft B 1825 

IS 

4 4 

iSP 

258 

LBI 

338p 

1 

3 0 

VI9 

3i0 

Lloyds 

6l4p 

. 38 

i 3 

3^'* 

30\ 

Marujf’s H.inovor T'st $34'* 

'4 

4 6 

8,325 

62320 

Mediobanca 

L 62 >00 

- 650 

1 7 

iJO 

140 

Mercaiiiile Credit 

21 Op* 

7 

3 6 

27,6 

102 

Mercury Secs 

leop 


i 7 

5’ 

287', 

Midland 

52Hp 

14 

3 0 

?34 

173 

Mitsui 

Y 256 

6 

1 9 

2 3 

113 

Montagu Trust 

20Sp 

i2 

1 7 

^'7 

62'i 

Morgan J P 

$75’. 

1*. 

3 7 

'}() 

260 

Nat & Gnndlays 

360p 

5 

4 2 

v; 

2 62 

Nat Australasia 

SA3 54 

■ 0 02 

3 4 

ftCi 

91'* 

Nji Com Grp 

I78p 

, 6 

2 6 

r.o 

323*4 

Nat West 

607f 

, 23 

2 5 

15 

124 

Norsk Creditbk 

%I33 

' 1 

6 8 


il*u 

Royal Canada 

6?4’, 

1 , 

2 5 

6 

4l2't 

Schroders 

608p 

22 

1 5 

12 

192’* 

Slater Walker Secs 

329p 

, 9 

2 5 

IIV 

2800 

Soc Gen dc Barique 

Fr B 2950 

|55 

4 4 

iBtvO 

2430 

Sor Gen de Belgique FrB2640 

■ 5 

2 6 

IW 

200 

Standard & Chart 

350p* 

2 

3 4 

339', 

264 

Suez 

Fr 282 

1 1 

4 1 

399 

209 

Sumitomo 

3 370 

E28 

1 7 


3020 

Swiss Bank Corp 

Fr S 3920 

1 155 

20 

L'liO 

3720 

Union Bank Swicz 

Fr S 3915 

1 150 

2 6 

% 

320 

Union Discount 

490p 

5 

3 8 

JJ9 

134 

United Dorn Tst 

238p 

-r-16 

2 6 



Insurance 





46'i 

Aetna Life & Cas 

563*4 

-f 6’. 

2 5 

399 

335 

Allianz Versich 

DM 365 

-5 

1-6 

«2 

320 

Comm Union 

460p 

+ 12 

3 3 


Gen Accident 
Generali 
Gdn Ro/at EmcH 
Legal & General 
Nat NodHandn 
Pearl 
Phoenix 
Prudential 


Pi ices 

1971 

Ordinary 

Price. 

Change 

Yeld 

Pi If 05. 

19/1 

Ordinary 

Pnri'. 

Changr 

Yield 



stocks 

Dec 29. 

on 

Dec 



storks 

Dec 29. 

('ll 

IVc 

High 

Low 


1971 

week 

29 

High 

1 ow 


1971 

wee' 

29 



Breweries, etc. 




84 

’)2 3 

Hoesr h 

DM 57 >7 

2 1 

8 6 

140 

‘>2’, 

Allied breweries 

I37p* 

I 7 

37 

85 3 

54', 

Hury/ivi fi 

FI 60 3 

0 9 

6 7 

55’* 

37'.* 

AnheiivOt'Butch 

$55'* 

2 

1 0 

1/2'* 

134', 

M.iiini".ni.iriii 

DM 140 

2', 

8 6 

151 

9b 

Bass. Ch.irriiifton 

ISIp 


3 3 

64 

50 

Nippon Steel 

Y 

2 

9 4 

165 

117 

Bols NV 

FI 136'i 

\ 6’, 

2 6 

102', 

6’; 2 

RI .Oil 

[)M /4', 

3', 

6 8 

137 

88'. 

Courage 

I24p 

6 

30 

96’, 

60 

fhy’,scn Miielte 

DM 68 9 

1 1 


179 

125'. 

Distiller^ 

I6lp 


4 0 

205 

MO 

Upiiir Kulilm.in 

Fr 150 

7 

6 8 

34*4 

24', 

Distill Seagrams 

$34'* 

1 7 , 

2 0 

35'* 

2> 

US Steed 

$31 


5 2 

465 

38S 

Dortmund Union 

DM 435 

1 3 

2 3 

122 8 

83 9 

Lismor 

fr 86', 

■ 1 4 

8 0 

186 

no 

Ginnncss 

i85p 


4 0 

120 

41', 

Wcndi’l-Sidelor 

Fr 47 

2 7 

8 1 

274 

194 7 

Hemekcn 

H 251 4 

; 12 4 

1 3 







80 

57 

IDV 

;6p 

1 

4 0 







265 

188 

Kinn Brewery 

Y 227 

i 9 

3 3 



Electrical, electronics 



19*4 

13'. 

N.it Distillers 

$16'. 

t 1 

5 6 

201 8 

132', 

AEG lehdiinken 

E;M M2 

2 8 


97’* 

6 i ’4 

Scottish A Newc 

89p 

1 

3 i 

285 

1/0 

ASIA 

Ki 2/8 

2 

3 6 

92', 

6I‘, 

Sth African Br 

7;p 

J 

4 0 

199 

122 

BIC.C 

'9ip 

/ 

3 6 

177 

90'. 

Wacney, M.inn 

I64p'» 

B9',p 

1 

3 3 

47b 

3 /J 

CGF 

1. 413 

3 2 

3 9 

95 

SH. 

Whitbread ‘A* 


\ 4 

16 I 

W, 

Chhridi’ Hi'firic 

I59p 

1 

2 8 






83'4 

49'. 

Cotiii n 

$66*. 

/■'. 

0 8 


Building, building materiala 


A^io( PoiilAnd 
BPB Iridustrlfi 
Boise Cascadf 
Bovis Holdings 
Cimonis Lafarge 
Cirm*nreri<*s Briq 
Cosiain 

tng China Clays 
It ikemonti 
Lding *A‘ 

London Brirk 
Mai ley 

Pllkingron Bros 
Redlanc! 

Rugby Portland 

Steetky 

Taimac 

Taylor Woodro'v 
Wirnpoy 


I75r* 

$I8’« 

268p 

Fr 194 
Fr B2I00 
245p 
I09p 
1. 20800 
i86p 
il6p 
I56p 
■».J2p* 
I29p 
I46’»p* 
IS6p 

266’ *p 

354p 

227p 


Catering, hotels, entertainment 

ATV A' :50p 17 

CBS 547’, IV 

Granada ‘A’ 435p -I I 

Cl and Metropolitan 204p I 

Floliday Inns $45*4 

Lyons 'A' 595p i 5 

Ti ust Hotiscs-Forie i87p 16 


De.td 

EMI 

Cli’ctiolii)' b' 
LMInt'sOri b’ 

GciuTiil IJiTLnf. 

C)t‘n Tel A El<'( 
IIiiiJm 
I loni y'Mi, It 
Hoovfi 

IBM 

liu CoiiipuU'r.k 

M.irlnncs BiJll 

Maisusliita 

Pliilipi 

Plessoy 

RCA 

Rt'diffiisioii 
Reyr-jlk Parsons 
Siemens 
Sony 

Spci ry Rind 
Texas ln>,iriirnpnls 
Thomson-! ioustori 
Thorn Electrical 
Toshiba 

Wpsiiiin Union 
WpstingliouSi’ 


282p 
200p 
Ki 1/6 

Ki 7/5 
$6j'i 
i/7p 
$31’* 

Y 106 
$I3S 
$S8'/ 

$337 

I4lp 

fi 80’ j 

Y 508 
S45p 
M9p 
S30 
l02Sp* 
RBp 

DM 205's 

Y 3390 
$31'* 
$174*. 

Fr 97 
462p 

Y /2 
$43 
$46^. 


Engineering, shipbuilding 


Sun Alllapce 

M2p 


Talsho Mar ft f 

V3I5 

-07 

T^lo Mkrine 

Y50B 

+55 

Zurkth liu 

Fr S47S0 >Hi$0 




Chemicals 




l\) 

l/J', 

At row ’A' 

'2t/8p 

, 2 

2 3 

91 

56 7 

AKZO 

rICI 9 

1 3 3 

6-4 

220 

IhT 

Atl.n Copco 

Kr 218 

2 

2 3 

1060 

724 

ANIC 

L 812 

- 3 

6 2 

«s 

(/', 

B5A 

30p 

, 


37', 

27 

Amer Cyanamid 

$34’* 


3 6 

309 

225 

Babcock A Wilcox 

309p 

. 17 

3 2 

161 

113 2 

BASF 

DM 138’, 

f ’• 


ISO 

100 

John Brown 

I64p 

, 3 

7 0 

164 

113 

Bayer 

DM 132 3 

,0 7 


1595 

890 

Blown Bovpri ’A' 

Fr 5 H05 

5 

4 5 

2930 

2250 

CIBA-GEIGY 

FrS2580 

: 75 

0 8 

98‘, 

56’, 

Cohen 600 

75', p* 

■ 4 

6 0 

79’. 

48'. 

Dow 

$78*4 

! 2*4 

2 3 

60 

36 

lJ.ii.y Ashmore 

50p 

- H, 

2 5 

158 

129*. 

Dupont 

IH4*. 

! •• 

3 S 

188 

M3 

Denivig 

DM !65 

1 1 

^ 8 

340 

220 

Fisons 

33ip 

2 

3 2 

45 

17', 

P Hliou 

45p 

> 4 

1 4 

35'. 

25*. 

W R Grace 

$28 

*• 

5 4 

1 32'* 

76 

Firrh CJi-vcIjnd 

I09p 

1 

6 4 

198’* 

120-2 

Hocchst 

DM 148 

4 3 


428 

271 

GKN 

406p 

■ 2 

3 2 

335 

230 

ICI 

277p 

* 4 

5-0 

183', 

129 

Gutelioffnutigs 

DM 146’, 

Vi 

4 8 

148 

77 

Laporte 

78p 

3 

2 6 

37 

12', 

Harlarid A Wolff 

27p 

i2‘r 


S3'. 

37’, 

Monsanto 

|4B'« 

1 1’* 

3 7 

65 

32’, 

Head Wrightson 

65p 

1 l‘. 

4 6 

904 

630 

Moncecacini-Edison 

L743»4 

\ 3‘4 


67 

27 

Alfred Herbert 

67p* 

) 9 


1295 

520 

Norsk Hydro 

Kr 1000 

1 135 

11 

100 

66 

IHI 

Y 89 

6 

6 4 

245 

158 

Rhone Poulenc 

Fr 163 

2 

5-9 

19’* 

9'* 

Init-r Conibsin 

I8'*p 

i 1 


2875 

2125 

Solvay ‘A’ 

Fr B 2220 

30 

7 0 

144 

81 

Inter Comp Air 

I42p 

1 13 

2 S 

162-9 

119 7 

St Gobain 

Fr 131 1 

- 0-9 

4 8 

44 

19*4 

Laird Group 

42p 

. ; 


344 

180 

Takeda Chemical 

Y 190 

+4 

4 5 

206', 

155', 

MAN 

DM 169', 

i', 

S 4 

50 

39 

Union Carbide 

$43'. 


4 6 

83', 

56 

Mather A Platt 

78p 


3 6 







420 

277 

Metal Box 

3B9p 

1 14 

3 2 



Coat ft stool 




93 

72 

Mitsubishi Ideavy 

Y 80 

1 3 

7-5 

5000 

3485 

Arbed 

FrB3880 

100 

10 5 

140 

101 >■ 

Morgan Crucible 

il8p 

5 

4-4 

29 

19*4 

Bethlehem 


-+ 1 

4-1 

435 

340 

SKF *6’ 

Kr 400 

10 

3 0 

14-75 

9 26 

Broker HlH Pty 

|A J2'95 

40 9:, 


68 

3i>4 

Serck 

68p* 

i 6 

2 9 

t64'» 

124 

Denam Longwy 

Fr 139-9 

H4 1 

5 9 

180 

97', 

Simon tnging 

)20p 

14 

6 2 

543 

304*4 

Fintidor 

L3I9 

^7 

lt-8 

74', 

33*4 

Stone-Platt 

67p 

1 1 

4 1 

t4S 

130 

Fried Krupp 

DM )4S 

flO’t 

6 9 

65 

IS 

Swan Hunter 

62p 

1 3 

3 2 

204 

147 

Granges A B 

Ki-147 

3 

82 

3800 

3020 

Sulzer 

FrS32O0 

+25 

4-4 






Hi 


THE ECONOMIST JANtrARV I, 197 a 


PfKci, 1971 

Ordinary 

Price. 

Change 

.Yield 



stocks 

Dec. 29. 

on 

Dec 

High 

low 


1971 

week 

29 

467 

304 

Tube Inypiimonis 

43Bp 

1 1 

4 3 

29'. 

I8\ 

US Industries 

$24 


2 5 

95 

52', 

Vick'-rs 

93p 

8 


90 

55 

Wrir Cifoup 

89p 

1 

6 2 

108 

SI', 

Thus W Ward 

iOBp 

• ' 

4 0 

298 


Food, pharmaceuticals 



776 

Allipd Supplipn 

290p 

1 84 

3 0 

75 

42'. 

A4s«»r British Foods 

73',p 

I 

2 5 

67 

36', 

Asso< flshcrirs 

66', p 


4 9 

III*. 

82’. 

Avon Pioducis 

$100’, 

5*4 

1 3 

358 

275 

Br^fham Group 

3l3p* 

2 

7 0 

17/ i 

140 

Bcghin 

Fr 148 4 

1 B 3 

5 0 

. 8? 

51’. 

Brooke- Bond B' 

72p 


3 / 

88'. 

49 

Cadbur)r Srhwrppr-s 

87',p 

1 1 

4 6 

60’, 

43', 

r.ol/a<<‘'P.ilfnoltvc 

$59*. 

I'. 

7 4 

6 3? 

4 OS 

Col Sug,ir Kef 

$A5 16 



173 

48*4 

fitch Lovell 

il7p 

1 

7 6 

44’* 

31', 

Gpncr.il foods 

$35*. 

I 1*4 

1 9 

4I‘. 

31*4 

Gc-noi.il Mills 

$41*. 

. 2’. 

1 4 

450 

284 

CLikm 

439p 

II 

1 8 

47’. 

34 

Hnn/ 

S4i*. 

• I*. 

7 4 

200000 

163000 

Hoffm III L 1 Modn- 

Tr S 174250 ■ 1250 

0 6 

46'* 

38*4 

Kr.ihrn 

$46'. 

1 

3 

1745 

1425 

[.•Qr-.l 

F, 1610 

10 

1 0 

T2JI 

2545 

MotiA 

i 2660 

8 


3520 

2615 

NcsiU- 

Fr 5 2935 

. 100 

7 3 

42'. 

3S'. 

Phm 1 

$41*4 

'* 

1 4 

Bl 

56*. 

Pfijeter (iitinbh- 

$76*4 

4'* 

J 0 

i62 

88*4 

Hanks H 11 V 1 -. 

I62p 

1 

4 9 

J22 

19) 

HL'ckiil a Coiniaii 

7//p 

j 

1 1 

4420 

3810 

S.indo/ 

Fr 5 4075 

. 45 

: L 

63 '1 

26’, 

Sfi'U-f. 

62', p 


3 e 

4:> 

79'* 

fivvifi 

$35'. 


2 0 

182'. 

119 

T no A L yli- 

I82',p 

1 2'« 

5 5 

144 

79’. 

Umyaie 

I36p 


3 1 

340 

215 

Uriiiovor 

320p 

FI IIS', 

5 

3 0 

170 

79 4 

Unilovot NV 

, 2 6 

4 6 

757 

171'. 

Uniti’d Biscinis 

257p 

3 

2 / 



Motors, a«rospu< • 




55 

30 

BLMC 

55p 

1 7 

1 7 

25'« 

14 

l3oi III}' 

119 

. *4 

7 1 

55', 

38'* 

C.i(erpill<ir tract 

$48 

1 '• 

7 9 

33 

7S 

Ch| ysh'i 

$29'. 

i 

2 0 

106 e 

/I 2 

Citroen 

Fr 78 

1 4 2 


379 

284', 

CJaimlor Ben/ 

DM 321 

6 

2 7 

178 

124 

Dunlop 

I74p 

t 1 

4 7 

7650 

1975 

hai 

1 2272 

1 4 

5 3 

56 

20 

fiip-'roiM- Tim- 

$26’. 

, 1 

3 0 

73 

',4*. 

lord 

171 


3 7 

31 

18*4 

(ji’ncr.il Dyn inurs 

$21’. 



89*. 

76'* 

Gt-m'i.sl Mofors 

$80’, 

• 

4 7 

34*4 

2/^. 

G(jiul/o.ir 

$31*4 

1*. 

! 7 

322 

173 

H.iwlic'i Siddt'loy 

322p 

1 5 

4 1 

266 

30 

Honda 

Y 250 

14 

3 6 

255 

IJI 

Komatsu 

Y I.S3 

, 5 

5 6 

14'. 

8*. 

1 tick lift d 

$9'. 

*• 


395 

156 

1 lies 

390p 

13 

7 6 

12'. 

8’. 

Massi-y Forguson 

$C II*. 

4, 


38*4 

21'. 

Mt Donnell Douglas 

$33*. 

(<• 

1 2 

1398 

1084 

Mith.-lin B 

Fr 1219 

■ li 

1 3 

74/ 

.40 

Nissan Moiiir 

r 247 

< 52 

3 2 

30’. 

19’. 

N Am Korkwcll 

$30'. 

' ’. 


783 

774 

Pfugrot 

Fr 248’, 

1 4', 

3 2 

7660 

1567 

Pin Ill-Spa 

L 1744 

7 

6 3 

700 

92’, 

Srntrhs Indus: 

I98p 


3 1 

247 

|9I 

Stt-yr-Daimlrr-Puf h 

%I93 


4 7 

48G 

220 

loyota Motor 

Y 405 

1 5 

2 0 

44 

24--. 

Unit.«’d All craft 

$29*. 

2 

6 1 

217 

<23’, 

'/olksw.ij’cn 

DM 134 8 

1-2 

6 9 

728 

159 

Volvn 

Kr 226 

2 

1 8 

59 

30 

V'estl inH 

55',* 

7', 

5 7 

104 

47 

W, uiol-Brci'tien 

I04p 

3 

2 V 

309 

131 

OfYiro equipment. 

photographic 


(, auoM 

Y 203 

. 4 

3 7 

99’. 

72'* 

rasroian 

$97 

2 

1 4 

6/5 

354 

Fu|i photo 

r445 

> 4/ 

1 7 

2150 

ISIS ■ 

GfvKTi Agfa 

Fr B 1 745 

50 

3 4 

70/ 

115 

CiPSH'ini-f A 

;66p 

1 2 

1 r 

515 

7SI 

Nippon Optical 

Y i75 

(. 

2 0 

2768 

1360 

Ulivt’lti 

1 1715 

36 

5 0 

742 

167’, 

07llld 

229p 

1 5 

7 7 

116 

77', 

Pol Hold 

$91 

4*. 

0 4 

960 

667’ i 

Rank A' 

B67p 

. 12 

1 2 

;26'4 

85'. 

Xi'rox 

$128’, 


0 6 



Paper, publishing 




190 

!0I’, 

Borri-g.iard 

Kr 101’, 

1 

7 9 

I9I'4 

IJ3 

Bowatt-r Paper 

levp 

, 7 

5 3 

119 

66 

Bun.l Palp 

ll‘»(. 

1 14 

I 8 

37'. 

27*. 

( rown Zellerbar n 

$34', 

1 '. 

3 5 

169 

no 

l^KG 

u-fp 

5 

4 9 

28 

20'* 

MarMillin Blocd.l 

$C 26 

1 


24 

15'. 

MiG) aw Hill 

$19 

. 1 

3 2 

231 

108*4 

News Inrernaiional 

200,, 

»92p 

1 

4 5 

192 

97’, 

Pearson Longnun 

:-io 

2 6 

271 

121 

Rpcd lot 

27lp* 

:-5 

4-6 

’O 

60 

Thomson Org 

78p 

1 

9 0 



Prbperty 




107*. 

61 

Capital A Count irs 

IC3V 

1 4 

2-4 

595 

274', 

Hammei sons ’A’ 

595p 

; 15 

1 0 

209 

121 

Land Securities 

191 ’,p* 

4 

2 3 

116 

64’* 

LMS 

106’, p 

r l'» 

2-1 

225 

486*1 

118*. 

58 

MFPC 

St Martins 

22Sp* 

I86^sp 

1 4 

t.9'. 

2-4 

1-6 

385 

301 

SG Immoblliare 

L306 

5*1 

6-5 

m 

100*. 

Ster (Gt Britain) 

2tfp 

if6 

2-f 


416 , 

Stock Cot'version 

s?i;. 

1 

0-8 

68*. 

TraCsIgar F-louse 

13 

i-7 



',/Vvj; .1 ■ 4,, . 


.i. 



Prices. 

1971 

Ordinary 

Price. 

Change 



stocks 

Dec. 29 

on 

High 

Low 


1971 

week 



Transportation 

$40'. 


42 

22'. 

American An lines 

l’« 

234 

152 

Brit A Comnt 

230p 


14*. 

II*. 

Canadian Pacific 

$CI3*. 

t 32 

410 

262 

Furnes-» Withy 

348p 

25'. 

16 

Greyhound 

121’. 

1 % 

1800 

1440 

Lipan Air Lines 

Y 1551 

1 SI 

210 

9B 

KLM 

H 171', 

2 

90 

6U 

L uftli.-insa 

DM 66’, 

f 

19’, 

148 

9/ 

Or«-an 5ie.-im Ship 

I48p 

20 

10'. 

P.>u Arni'rican 

$15*4 

»• 

206', 

141 

P A O Dcfd 

I9l’>p 

|2’, 

760 

485 

Swissair (Bc-arer) 

Fr S 575 

15 

4)'. 

13*. 

IWA 

$43*. 

-1 •- 

45 

71’. 

UAl 

$41*4 




Stores 



92 

68-4 

Bijr nkorf 

FI8I-8 

1-4 

745 

130 

BtXDtS 

245p 

* 7 

299 

144'* 

Brit Home 

28Sp 

12 

767 

155 

Burton Group 

239p 

1-4 

755 

I5H 

L>cbenhams 

246p 


171 

120 2 

G ale r ICS Lafayette 

Fr 125', 

f2 7 

171 

790 

Galena-. Precdos 

%332 

1 5 

79/', 

191 

Giattan Ware 

274p 

1 2 

32'* 

18 

Great Atlantic 

$20*. 

f 1'. 

297 

180', 

GUS 'A' 

292p 

14 

233 

10/'. 

House of Fraser 

233p 

19 

2550 

1360 

Innovation 

Fr B 1620 

1 210 

397 

799 

Karstadt 

DM 330 

1 

261 

226 

Kaufhof 

DM 242 9 

Fl 9 

4/6’, 

1/1 1 

La Redoute 

Fr 476', 

fl9 

314', 

237 

La Rinascente 

L 255*4 

-9». 

38’, 

27*. 

Mar cor 

$31’- 

I*. 

331 

194*4 

Marks A Spencer 

295p 

-• 4 

44/ 

288 

Mitsukoshi 

Y420 

8 

1 89 

1 13 

Myer Emporium 

$AI-B8 

1-0 03 

115 

80 

Ncckermann 

DM 107 1 

-0 9 

174 

113 

Nouvelles Gals 

Fr !24', 

7 2 

75*4 

54’. 

JC Penney 

$73’. 

2’. 

177', 

125', 

Printemps 

Fr 149 

14 1 

284 

176’* 

Provid Clothing 
Sears 'A' 

279p 

2 

176 

88'. 

I76p 

1 10 

103*. 

75’. 

Sears Roebuck 

$103*. 

l3». 

645 

332’, 

WH Smith A* 

645p 


85 

51 

Tcico Stores 

82’, p* 

1^ 

147 

77*4 

United Drapery 

I39p 

1 4 

55'. 

35*. 

Woolworrh 

|46k. 




Toxtilos 



49*4 

27’. 

Burlington 

$33% 

*. 

145 

70 

Carpets International t40p 

12 

76’ i 

45 

Coats Patons 

76'ip 

l-l 

149 

107 

Courtaulds 

I49p 

1 9 

102 


Doilfui-Micg 

Fr80 4 

- 0-8 

54 

32'4 

English Calico 


90 

4I3S 

1602 

Snia Viscosa 

L 1790 

38*. 

20 

Stevens, JP 

$27 

1 % 

68 

61 

Teijin 

Y 75 

1 8 

131 

84 

Toray Ind 

Y 97 

F7 

57', 

45 

Wcxslcombers 

45p 




Tobocco 


19 

391 

265 

Bnt Amer Tobacco 

326p 

165 

103*4 

Gailaher 

I65p 

i 3 

100 

64*. 

Imperial Tobacco 

94p 

1 2’, 

69'. 

51 

RJ Reynolds 

$58*. 

r. 



Utilities 


12’, 

53'. 

41’, 

AT A T 

$45’. 

835 

670 

Chubu 

Y 800 

-1-6 

805 

680 

Chugoicu 

Y790 

1 10 

29 

24'. 

Cons Edison 

$25*. 

1 *4 

2735 

2385 

fBES 

Fr B 2615 

155 

2030 

1830 

Intercom 

Fr B 1995 

125 

826 

700 

Kansai Electric 

Y782 

1 2 

233', 

Inl 

RWE 

DM 180’* 

- 

840 

660 

Inkyo Electric 

Y BOO 

f 10 

lOS 

83 

Tokyo Gas 

Y97 

1 1 



Investment trusts 



230 

172 

Alliance liusl 

230p 


147 

106 

Atlas Electric 

I45p 


145', 

'12’. 

BET Deferred 

I45'.p 

1 3 

86 

66 

British Assets 

86p 


150 

109 

Cable Trust 

I49p 

-f 1 

158 

M8 

Foreign A Col 

I56',p 

13'» 

156 

108 

Globe Investment 

I54p 

2 

132', 

94'. 

Industrial A Gen 

Ii2',p 

4 1’. 

58', 

44 

Mi-rcantiU Inv 

SB’,p 

l-l 

248 3 

200'. 

Kobeco 

H 225’, 

1 1 7 

198 

’.49 8 

Rolinco 

FI 166 

I 1', 

103 

68', 

Witan Investment 

I03p 

14', 



Multi-product, miscellaneous 

423 

335 

Air Ltquide 

Fr 367 

1 7 

1280 

883 

BSN 

Fr 990 

1 <8 

150 

68*4 

Bookers 

I49p 

15 

190 

138 

British Match 

IB7p 

2 

75 

50 

British Oxygen 

75p 

16*. 

126 

78'. 

Br.-tish Ropes 

Il8p 

2 

58', 

11’, 

Cope Allman 

54»q>^ 

•t 

205 

120 

Oalgety 

201 p 

1-3 

249 

117 

Dc La Rue 

22lp 

$73’. 

! 6 

35'. 

19 

Engelhard Minerals 

1*. 

30*. 

19*. 

Gulf A Western 

$28’. 

*. 

79 

46*. 

Halliburton 

$79 

12', 

39S 

242*. 

Hays Wharf 

J94p 

1 

IOI2'v 

67 

735 

46’. 

Hudson’s Bay 

ITAT 

W* 

30 

423 

26$ 

im 

128 

Inchcape 

Citoh 


6 

4 90 

2S«e 

7*i 

Llng-Tetnee-Vouikt. $10*4 7^ 


m 

19 

Ltetop .Indu^tTki 



95% 

liinnanota Mining 

$I3»« 




fl' 



YiHd 

D«c 

29 


4 3 

4 7 

2 6 

3 8 

4-7 

6 3 

5 2 


4 4 

1 9 

2 2 
2 6 

4 I 

3 6 
26 
6 4 
2-4 
3 i 

5 6 
3 C 
41 

1- 9 
3 I 
2 6 
2 4 
2 I 

2 8 

2 - 0 

I ‘4 

2-6 
2 9 
1-5 
2 I 
1-9 
4-0 
2 6 


4-2 

4 6 
4-5 
4 6 
4 3 

4- 7 

5- 6 
B 2 
8 7 
3 3 


3-8 
5-8 
5 1 
4 I 


5 7 
6-3 

6 4 

7 0 

5- 7 
6 0 
6 4 
4-4 
6 3 

6- 3 


2- 4 

2 7 

3 8 
17 
2 6 
19 
2 5 

3- 2 
3-5 
5 I 
1-8 
17 


2-8 

19 
3 7 
5 1 

4- 0 
3-8 

5- 7 
5-0 
5 I 
17 
2-1 

1- 3 

2 - 0 

2-3 

20 
2-9 
2-3 


1-4 


Prices 1971 
High Low 


Ordinary 

stock* 


Dec 29 
1971 


Chsfige 


Yield 

Dec 

29 


164 

210 

270 

43*. 

29*# 

32*4 

I37'» 

218 


677 

632 

477 

251 9 

103 9 

33^. 

59’. 

4300 

34*. 

153'. 

426 

62’. 

69*. 

8I\ 

90*4 

39 


360 

271 

2B5 

1012'. 

1750 

720 

675 

223 


25’4 

70 

3800 
37*. 
23’. 
273 
258 
Ii6'a 
155'4 
46*. 
315 
56 
113 
3 90 
450 
18/ 
92 
712 
33 
270 
288 
780 
1945 
5 24 
260 


328 

276 

45’» 

57’t 

230 

33’i 


121 

132 

117'. 

28’. 

22 

23’. 

67'. 

177 


467'. 
403 
297'. 
153 8 
80'. 
24', 
47’. 
3040 
26*. 
109 
295 
SOS 
52’a 
67', 
70'. 
29’. 


202 
160 
I S’* 
755 
850 
460 
410 
f20 


6 ', 

37S 

1660 

26 

II'. 

8 / 

165 

53 

57'. 

26*. 

212 

20 

48 

2 35 
270 
126 
52 6 
69 
14*. 

173 
115 
425 
1190 
2 10 
148*4 


248 

159*. 

26*. 

37 

145 

17', 


Mitsubishi Shoii 
Mitsui 

S Pearson 8 Son 
TRW 
Teoneco 
Textron 
Thomas Titling 
Turner A Ncwall 


Y 164 
Y204 
241 p 
$31’. 
$25*s 
S29’s 
I37’tp 
2t8p 


Oil 

Aquitaine 
BP 

Burmah Oil 
Cie Pet roles 
Gelsenbcrg AG 
Gulf Oil 

Mobil on 

Peirofina 

Phillips Perroleum 
Royal Dutch 
Shell Transport 
Standard Oil (Calif ) $57*. 
Standard Oil (lnJlana)$69*. 
Standard Oil (NJ) $74 
Standard Oil (Ohio) $83' 
Texaco $35 


FrSSI 

522p 

368p 

Fr m 

DM 83-6 

$29 

♦54*. 

FrB36S0 

$30’. 

FI 114 3 

337p 


Gold mines finmnee 


Anglo-American 
Charter Cons 
Cons Gold Fields 
General Mining 
j iSurg Cons 
OFSIT 

Rand Selection 
Union Corp 

Mines, metals 

Alcan 

Alcoa 

Alusuissc 

Amer Mel Clim 

Anaconda 

CAST 

Dc Beers Defd 

Delta Meial 

Fakonbridge 

Inter Nickel 

Johnson Matt hey 

Kennecott 

Lonrho 

MIM Holdings 

Mctallgesellschaft 

Pethinoy 

Penarroya 

Potgietersrust Plat 

Reynolds Metals 

RT2 

Roan Cons 
Selection Trust 
Union Miniere 
Western Mining 
i’amanglo 

Plantations, etc 

Consolidated Tea 
Guthrie 

Highlands A Low 
Jokal 

Longbournc 
Plantation HIdgs 


25Sp 

240p 

207p 

BOOp 

I038p* 

535p 

590p* 

i48p 


i 17 
f25 


I I 


18 

-fS 

I 20 

1-4 

-0-9 
+ 2*- 

45 

+ 2 '. 

I 17 
i IS 
I •• 

4 -4 

l■2•4 
f 1*4 


-15 
I 6 
1 I 
10 
87 

-I 50 

t 2 


$Cib*a 

$43’. 

Fr S 1870 
$28 
$15’. 

I68p 
240p 
Il6’,p 
$C 80*. 
$32’. 

64p 

$A3 12 
DM291 
Fr 136 I 
Fr 55’. 

r?- 

23ip 
I75p» 
560p» 
FrB 1460 
$A3 00 
I87p 


32Bp 

276p 

45’4P 

49p 

l4Zp 

33'.p 


I 5 

1 I'* 

•4 

2 

)2 

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|2’- 

F’. 

-4 2 

42 
-1-0 17 
16 
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-6 

30 

40 

i 013 
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i 6 

I 14 

I 2*4 

f I 
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I 3 


4- 0 
3-4 

5- 2 ' , 

3-r 

2-7 

5-0 


2 4 
40 
4-4 

3- 1 

4- 8 

5- 2 

4-7»4v 

2- 9^ 

4 2 
6'3 
4-3 
4-9 

3- 3 

5 3 

3 2 

4- 6 . 


3-2 

2 9 

3 I 

iUi 

8 4 

3 7 

4 2 


4-1 

4 8 

5 0 

2 6 
30 

4 3 

3- 1 

4- 4 

7- 2 

8- 9 
2 6 

6 7 

5 9 
V-8 
3 5 
2 6 

24-3 

2-8 

6 7 
0 3 

21-1 


9-3 

5- 9 

6- 7 

5 

19 5 

6 0 


I 


Money Market Indicators 

Tht* American Treasury bill rate came down sharply last week; 
whilf money market rales held broadly steady in London The 
exchange markets have been dominated by yoar-end influonco* 
Furocloilar rates were still firming, but dealers expect theni 10 
ccimo down in January 


Bank Rate 5% (from 6%, 2/9/71) I 


»4'.% 


Deposit rates 

/ days' notice 

Clearing banks 

2’, 

Local authorities 

3 months' fixed 

Local authorities 
Finance houses 

4*. 

4*, 

4*. 

Interbank rate 

7 days' 

4*. 

Treasury bills 

3 months' 

4-47 

Eurodollar deposits 

7 day*' notice 

3 months' 

E 

o 

c 

:>;tS 


Eurosterling deposits (In Pons) 
2 days' notice 3*. 

i months’ 5'i* 


New York 

Treasury bills ? -73 

Certs, of deposit 4 20 

Sterling: Spot rate $2 5475 

Forward premium 

(3 months’) “i* o 


Annual int. cost 


(3 months'); 


Investment currency: 
Investment $ ^2'.% prci 


Covered arbitrege margins 

(3 months’) 

Treasury bills 

Eurodollar/UK local 
authority loam 
Eurodolmr/Eurosterllng 


In favour of 

Last week % Tbtt week % 
London *• 


N. York I V N. Ymfc 
London V tomlon 


. . .. 




INTERNATIONAL 

INSURERS 

ConmieixiallJnionAs^ 
CcHiipany limited 

St. Helen’s, 1 Undershaft, London EC3P 3DQ. Telephone: 01-283 7500 




I 

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From blast furnace 
to blast-off- 
Kawasald (space-age) Steel 


Here's furl))('r proof that for sheer versatility nothing beats 
good old steel 

Japan's second space satellite was blasted into orbit on 
February 16, 19/1 The outer shells of all three booster 
chambers were fabricated ot Kawasaki's ultra-high-tensile- 
strength maraging steel, with a remarkable tensile strength 
of 200 kg mm" They were formed at the company's Chiba 
Works from special alloy steel with 18% nickel content 
refined by electric-arc furnace at the Hyogo Works. 

In order to form it into cylindrical shapes the steel in the 

the fastest growing 


first stage had to be soft and ductile. Then to be strong 
enough to withstand the tremendous pressure of blast-off, 
it had to be made as tough as possible This was 
accomplished by a special aging - maraging -process that 
dramatically increases its tensile strength almost double. 

Technology like that is what keeps Kawasaki ahead in 
steel. 

Kawasaki: proud to produce some of the finest steels in 
the world for the space age. 


name in steal 


^ KAWASm 

• — steel corporation 

Tokyo. Japan 


Mic 

Hconomist 


NSERVldi 

Rtq. 

' January ig‘j2 



Haunted by Ulster 

Mr Maudling faros a prospect 
in Northern Ireland that 
neithrr Protestants nor Catho- 
lics arc weary enough of hurt 
and terror to want to mak(‘ 
peace. ITiis surprises English- 
men with panaceas to peddle, 
but they should certainly not 
hang the albatross of failure 
round Mr Maudliiig's neck, 
page II, 



He’s willing 

Mr Nixon has duly indicated 
that he is running for 
re-clcction next November. 
He’s confident, but there’s 
quite a bit that needs to come 
right before he’s a shoo-in, 
page 15. Muskie of Maine: a 
political portrait, page 42. 


On the moon 

How much do wc know about 
the moon after four landingvS, 
2 i years of research and the 
accumulation of a quarter-ton 
of rock and soil ? Scientists 
have been summing it up at 
Houston and the moon looks 
more like the earth every 
day, page 6i. 


Hullo, Europe! 

Let’s throw a party when we 
go into Europe to .show* that 
we really have something to 
celebrate. Where it .should be 
held and what it should be 
like, page 59. 



That rattled feeling 

Mr Bre/hnev's government is 
showing a ( urious ru rvoiisin^s 
in the face of its domestic 
opposition. Is it weaker than 
it looks ?, page iG, I’hat hasn't 
Slopped it doing some effective 
arm-twisting on cast Germany’s 
behalf, page 17. 'The latest 
cast German unpleasantness, 
page 32. 


Contents 


V'olunir 2|'i Number 6899 


1 1 

llauntrc) by Ulster 


>3 

Nixon is willing 



Herause he’.s there 


(G 

IJndr'r western eves again 


'7 

Smog over Stoi khrilrn 

Britain 

2 I 

Ghatavvay will tell ifu: ITA to go thal- 
avvav ; f.abour party ; Conreyaiu in ; 
Local iiorrrnmcrit ; Student unions 

The World 


International Report : Norway under the 
spolligltts : Malta ; (Jermair^ ; Ea\t L'er- 
rnany ; Pakistan ; Rhodesia ; Israel ; 

J Arab eommuni\ts ; Japan ; (Jhina ; 
Indian Geenn ; Chde ; Ghana 


41 

American Survey : lJo-it-yours<'lf diplomat v ; 
Moderate Muskie ; Steel monoeurres ; 
Stubborn stall stir ; Aim for red power ; 
Pe n nsy ft u n r h : Th 0 ft/ u h 0 ra n an 'ay ; 
Thrift n bt,g business 

Books 

31 

Yriu’rr never alone vvili) a lioc^k ; Spain ; 
Liberals ; Durham miner \ ; Sdrena ; Mad- 
houses ; Hardy ; War ; Pollution 



He made it 

And now' that Sheikh Mujib 
has got home hi.s Bangladesh 
should get international recog- 
nition and money, page 13. 
Back in Paki.stan, President 
Bhutto is showing more rea- 
lism than his supporters ate 
in their demands for change, 
page 33. 


Business Brief 36 lnv('‘>tmrnt any more t arrots ? 


Business 39 Mullo, Europe ! 

61 B.ing go sonic more morin theories 
63 Ouf'ut' up lirrc for help 

G() Britain; l’h»' inintTs havt* to cool it; 
(Jars ; Economy ; Srd ; Trai rJ ; Don't 
meddle, Maxintc ; Shif)buddirio ; Vat ; 
Films 

72 International : Fragile . handle these rales 
with care ; Od ; Snru'ay and EEC ; 
land salmon ; f tncmpinymenf ; German 
labour ; World Bank ; Free jam 
79 Investment : A Boot for the market ; 
Thorn EUctncal Industries ; Wall Street ; 
Taper ; Australian minerals 
84 Unit trusts: Ves, but don’t just dive in 
lilindly 


Stock Prices 

and Yields 93 


© Th© Economist N>ws|>ui>cr Ltd, l^mlon, 1972 


International subscription service 

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London. SW1A 1JT. Tel. 01-930 515S 

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4 


Lcllcrs 


Sea power 

Sir — ^Y our leading article on sea power 
and western Europe’s dependence on 
America’s naval strength to guarantee our 
shipping lanes (January 8th) is most 
apposite. For it must be remembered that 
Britain fornis the western flank of Nato 
and, as you point out, Russian naval 
power in all the oceans is on the increase 
and, needless to say, the Russians’ forward 
deployment in submarines is gaining them 
considerable strategic advantage. The rate 
of Soviet submarine building, which has 
now reached parity with the United States, 
indicates an attempt to reduce the invul- 
nerability of the west’s nuclear missile 
submarines. Although it is doubtful how 
effective anti-submarine warfare has 
become, the Soviet navy does appear to 
be putting high priority on efforts to 
counter Polaris. The Soviet fleet in the 
Mediterranean has more than quadrupled 
since 1964. 

The accelerated Soviet naval power 
build-up reflects a growing determination 
to play the global superpower. The 
developing Russian capability for long- 
range intervention means that Soviet 
influence and pressure can be exerted on 
the spot during a crisis. The Middle East 
is, of course, prone to crisis. Massive 
political, military and economic aid to the 
Arab world has helped introduce the 
global confrontation into w'hat could have 
been an essentially local conflict. 

It i.s not insignificant, therefore, that 
the Soviet fleet possesses the ability to 
interpose itself between the western fleets 
and the coasts of the eastern and southern 
Mediterranean. It is probable that the 
Soviet Union now has the capability to 
saturate the Mediterranean with U-boats 
and therefore has dramaiicallv upgraded 
its nuclear and conventional hrepowTr in 
the area. It would be wrong (o over- 
estimate the dangers of these develop- 
ments, for the Soviet Union also has a 
vested interest in keeping events under 
control. Nevertheless, a greater concen- 
tration of British naval resources in those 
areas directly affecting European security 
would assist in strengthening the alliance. 

It is also useful to consider whether 
certain European countries could help 
strengthen the common defences by 
specialising in those aspects of defence 
in which they are the most qualified. If 
Mr Heath wants the Americans 10 stay 
in Europe, he might like to suggest 
that the non-continental powers should 
specialise in naval and strategic forces, and 
the continental ones in conventional and 
interceptor forces. This could be done 
without undermining collective respon- 
sibility in Nato. Our withdraw^al east of 


Suez does pifcrmit iri|Uh,|»yal strengA 
to be coAceatrtted on a Nato^olc. Britain 
will'^ be 4 nucb the strongest naval power 
in Europe in the 1970s, and this is a 
special contribution that can be made to 
strengthen the maritime security of 
Europe. — Yours faithfully, 

Alan Lee Williams 
Director-elect, 

London, WC2 British- Atlantic Committee 


Sir — May I express my agreement with 
your excellent article (January 8th) on 
“ rhe unending war “ ? Of course sea 
IXHwer still docs count, above all and 
cvcr-incrcasingly wihat you call the 
“ submarine sort.” Today we see the 
real submarine — immensely more for- 
midable than the mere submersible 
which brought us unpleasantly close to 
defeat in the two great wars. I believe we 
need many more nuclear- powered sub- 
marines in the Royal Navy for the anti- 
submarine, hunter-killer role — some at the 
expense of the two or three Polaris boats, 
which 1 think would be of relatively 
negligible importance in a nuclear war, if 
such a thing is really conceivable, in which 
the great American Poseidon fleet would 
be unlikely to need their assistance; surely 
no-one imagines that wo could engage in 
such a war except in alliance with the 
United States ? 

To me that is symptomatic of the 
trouble with our defence policy nowadays 
—we have not got our priorities right. I 
think our first priority today and in the 
foreseeable future should be the army, and 
in the RAF the aircraft to transport, 
support and reconnoitre for the army. And 
h<Tc is a priority within a priority. It is no 
doubt nice for the army to have ^11 those 
little “ whizzers ” and light helicopters 
flying around to collect information, which 
1 suspect (from some experience j to be 
too often quite misleading. But will any- 
one .seriously contend that these things can 
contribute more to our true defence needs 
than could the continued existence of, for 
instance, the peerless infantry of Welling- 
ton's Light Division, or the disbanded 
Gurkha battalions ? 

In the navy, if money and manpower 
were no object, I would like to see a lot 
of great aircraft-carriers ; but I think it 
ludicrous to maintain one — with all the 
associated shore establishments — at the 
expense of what I am convinced should be 
our overriding priority at sea, namely 
anti-submarine forces, surface and sub- 
marine, plus reasonable strength in 
missile-carrying vessels and assault ships. 
And, behind and over them, in the RAF, 
strike and long-range reconnaissance air- 
craft like the Nimrod. 

There is only one point in your article 
on which I find it difficult to agree. You 
say that ships can do part of 'tiheir job 
' simply by being where they arc, and by 
reminding people of the power that lies 
behind them.” But is that not exactly what 
real air power docs ? — ^Yours faithfully, 
Yeovil, Somerset J. C, Slessor 


THE EOONOMlItT JANUARY 15^ 197a 

Pauline Jones 

Sir — As Dickens knew, the subject of the 
law brings out the smugness and hypocrisy 
in us. But it is remarkable to see in The 
Economist, of all papers, such an extreme v 
example as the article advising critics of 
the sentence imposed on Pauline Jones to 
quieten down “ in her interest ” (January 
8A). 

Miss Jones must “face the reality of 
her position,” you say, and the rest of us 
must not “provoke hysterical symptoms,’* 

It is as if Sigmund Freud had never lived. 

Is there anyone, even a High Court judge, ^ 
who believes that a prison sentence can 
make a Pauline Jones “ face reality ” ? 

The Lord Chief Justice, in fixing a 
prison term of 21 months for Miss Jones, 
in fact offered no such correctional 
pretence. His argument was simple retri- 
bution: she had to pay because she had 
caused such torment to the parents of the 
baby she tuok and because she had cost 
the state so much in police lime. That 
view might be said to fit in with the 
old notion that sentences in notorious ca.scs 
must express the public’s idea of vengeance 
— but the irony in this scniciicc is that 
its savagery probably went well beyond 
public attitudes. 

Judges should try to elevate public 
understanding about crime and punish- 
ment. It is a sad day when the process 
has to work the other way around. I should 
have thought The Economist would be 
the head of the queue to point that out. 
The issue is not Pauline Jones alone. — 
Yours faithfully, Anthony Lewis ^ 

London, Ni 


Malta 

Sir — Your comments (January 8th) about 
the state of the Maltese economy if 
British troops do leave demonstrate how 
widespread is the inadequacy of know- 
ledge about the essential economic relation- 
ship between Britain and Malta Other 
things remaining equal, there can be no 
doubt that an untimely suspension of the 
injection of British funds, military and 
otherwise, could affect the Maltese 
economy adversely in the short term. But 
you paint a picture rather gloomier than . 
it actually may be. 

The British forces employ about 5,000 
Maltese, not 7,500 as you say. (Odd that 
Lord Carrington himself has been 
perpetrating this error.) Perhaps a better 
economic perspective is given to these 
figures if they arc expressed as percen- 
tages of rhe gainfully occupied population > 
per cent against 7.5 per cent. Of 
these, 1,000 are uniformed personnel on 
definite contracts of duty, who may or 
may not be retained in the British forces. 
The 4,000 civilians employed by the 
defence establishments ate a declining 
force. They arc being whittled down under 
the (second) British services rundown. 
This rundown was initiated in 1967 by 
Mr Denis Healey. 

You arc correct in stating that the 
deflationary multiplier cflFtct (of a British 


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THE ECONOMIST JANUARY 15,1 ^^2 


withdrawal) could not be easily or quickl)^ 
averted. But perhaps it is worth adding 
that Britain itself will get much of the 
effect of the negative foreign trade multi- 
plier which would be triggered off. The 
Maltese people have a very high propen- 
sity to import, and around 40 per cent of 
our foreign merehandisc purchases — over 
£2ftm in 1970 — awnes from Britain. In 
fact, if relations between the two count- 
ries do get bad, something which few 
would lik<* to sec, the effect on British 
exports to Malta may be nearer to our 
total, rather than the marginal, propensity 
to import from Britain. Our trade bill is 
small by wodd standards, but not loo 
insignificant that it could not be a useful 
card if Malta is forced to realign its 
extern.il relations. 

For the record, allow me to point out 
that alt aid given to Malta since 19G4 
(about £3om, of which a quarter was in 
loan form) was tied aid. Indeed, between 
1904 and 1071 we purchaseii £i63m 
worth of goods from Britain, which took 
£33m of our exports in the same period. 

1 believe it is fair to say that in recent 
years Britain has been taking as much 
easii out of Malta as it puts in through its 
government, tourists, and so on, while 
historically the balance has been very 
much in Britain’s favour. And this, of 
course, lakes no account of the 170 years 
of using the Malta base free or dirt cheap. 
Moreover, the Maltese have traditionally 
invested their Savings in Britain ; these 
are estimated to have reached some £2oom 
at least. It may be presumed, perhaps, 
that British users of Maltes<‘ loan capital 
made a profit out of it ?— Yours faithfully, 
Oxford Lino Spheki 


Jerusalem 

Sir — Sarah Hogg’s special survey on 
Jerusalem (December 25th) is to be com- 
mended for its largely constructive 
criticism and comprehensiveness. 'Fhe 
subject is one fraught with emotional and 
controversial content, and is thus difficult 
to deal wkh, but I do feel some com- 
ments need to be made. 

It is eminently unjust to use the words 
” captured and annexed ” when describing 
Israel’s presence in east Jerusalem. After 
all, when the United Nations designated 
Jerusalem for international status in 1948, 
it was Arabs and not Jews who “ captured 
and annexed.” Until 1967, the city was 
Jordanian -occupied , 

As for Arab land being expropriated in 
1967, such a statement must be qualified 
by mentioning that the land was almost 
exclusively owned by wealthy and exploit- 
ing absentee Arab landlords, now' sunning 
themselves in Beirut and Damascus. 

Lastly, four small fx>ints. It is in some 
bad taste to cjuote G. K. Chesterton on 
any matter corcerning Jews and Israelis. 
He never disguised his anti-semitism. 

Also, Montefiorc’s windmill was certainly 
not built as a result of any eccentricity on 
bis part. It was meant to symbolise the 


Jewish return to the land, a concept indeed 
still central to Zionism. 

Thirdly, the implication that Israeli 
buses have diverted business from Arab 
buses is due to one obvious fact — the 
Arab buses are extremely badly kept, prone 
to frequent breakdown and are unfriendly 
to travel in. 

And lastly, it is very presumptuous to 
say that the Jordanian-built hotel on the 
Mount of Olives is ” no^ aesthetically 
offensive.” Many planning ■ and other 
authorities agree that it is not simply an 
abomination to the eye, mining a most 
beautiful view, but that to build it on 
Jewish graves that are older than the Arab 
peoples was and is a w'anton act of 
desecra tion. — Yours faithfully, 

Bristol Martin Sugarman 

Sir — There are several aspects of the situa- 
tion in Jerusalem (December 25th) that 
ought to be stressed. First, the annexation 
of the Arab city is illegal in international 
law, which stipulates no exceptions for 
Israeli strategists or religious cranks. 
Second, the Arab population has been sub- 
ject to unpublicisi!d but unsubtlc forces 
which envisage their eventual expulsion — 
also illegal, and incidentally inhuman. 
Third, Jerusalem’s traditional spiritual 
character has been slowly acquired over 
millennia and i.s inextricably based on u 
Middle Eastern heritage ; it is neither 
Kiev, Vienna, nor Plonsk and any attempt 
to make it another pseudo-central European 
fantasy like Tel Aviv would unfailingly 
de.stroy tins character. Fourth, and most 
significant for westcnicrs, the universal 
appeal of the Holy City is derived not from 
its connection with Judaism, important as 
that may be, but from the sacredriess with 
which two un/ivcrsal religions, Christianity 
and Islam, have held the city over the past 
2,000 years. It is doubtful whether 
our culture will benefit from the trans- 
formation of its holiest city into a shrine to 
Israeli immigration policies and Zionist 
tribali.sm. — Yours faithfully, 

Beirut Julian Roberts 


Hypermarkets 

Sir — You say (January ist) that Sains- 
bury’s are “ firm High Streeters.” I regret 
to say tha^ this is a misleading statement. 

It iis puzzling to know why you made 
this assumption for, on many occasions, I 
and my colleagues have advocated the 
need for the development of new loca- 
tions for food shopping, both out of town 
and edge of town. I have spoken against 
the type of out-of-towiv^shopping centres 
wrthich despoil the countryside, but always 
in support of any development in areas 
which have good rdad access and which 
otherwise might be used for industrial or 
commercial development. 

llie great need is to plan for the 
shoppers of tomorrow, who for food and 
other weekly needs will be very largely 
car-bomc. In many areas, the only way 
in which to achieve this is by having new 
shopping centres outride the traditional 


town centres. In particular, I believe that 
the Government and local authorities 
should take more account of the economic 
advantages to the community which will 
derive from creating new facilities for food 
shopping on the edge of towns, which 
neither have the disadvantage of invading 
the green belt, nor of altering the attrac- 
tion of the city centres for non-food com- 
parison shopping. — ^Yours faithfully, 
London, SEi John Sainsbury 


Hi-fi 

Sir — ^Your article, “ Hi-fi : hum, hiss, 
boom ” (December 25lh), is extremely 
misleading. It gives (the impression that 
Che present hi-fi industry consists of a 
large number of small specialist firms 
which have stumbled upon an expanding 
market that is just about to be taken 
over by big groups with a superior market- 
ing ability. It enoirely underestimates the 
forces which brought about the evolution 
of the industry. 

The big groups were already selling 
equipment which claimed to he “ hi-fi ” 
as long ago as the early 1950s. Fhe equip- 
ment was usually housed in an atJiractive, 
but often very costly, cabinet, and seldom 
went very far towards accurate reproduc- 
tion of the original sound recorded on the 
discs or tapes. There was thus a challenge 
10 anyone who understood what the repro- 
duction of the original sound involved 
to build the equipment to do it. This 
challenge has been met by the present 
industry, but because it consists of such 
a large number of independent concerns, 
each convinced that it has the correct 
scientific approach needed to design the 
equipmem most able to reproduce faith- 
fully the original sound, the choice facing 
the consumer lis bewildering. However, as 
your article points out, there are already 
a number of dealers who arc able to 
compare systems for anyone willing to 
listen. In these comparisons the butler 
equipment can be discriminated by ear ; 
the superiority of the good equipment is 
achieved by good .science and not by a 
successful marketing technique. 

For the big groups to compete with 
the specialists, they must either build 
something better and cheaper themselves 
or buy up the successful designers. This 
is one industry where the quality of the 
product aoiually matters and where a 
business run by scientists will do better 
than one run by accountants. — Yours 
faithfully, Anton Ziolkowski 

Cambridge, Mass 


One Vat rate 

Sir — I was delighted and surprised to see 
that you have initiated public discussion of 
a single rate Vat system. 

You do not make it clear in your article 
(December i8th) that the Danish system is 
unique, in that all goods and services 
(except newspapers, ships and coinmercial 
aircraft) are taxed at the «ame rate and 
that fo^ is not exempt The happy rc^tt 



TUB ECONOMIST JANUARY {5, 1972 

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of this is that the Danish customs and 
excise needed to recruit only too extra 
clerical staff to deal with the administra- 
tion, and the system causes no difficulty 
whatsoever to the business community 
since Vat liability can be calculated easily 
from normal trading returns without th<! 
need for costly and complicated differential 
analysis of inputs and outputs. 

Any differential system of Vat is certain 
to be difficult and costly even for large 
organisations to operate, and most of these 
will only have to alter and adapt the 
system they already use on purchase tax. 
However, Vat will embrace over one million 
traders who have no need, except for Vai, 
to adopt the <‘xtrcmely costly and compli- 
cated book-kee])ing leehniques nece.s.sary 
if they are to at count for Vat levied on a 
differential ba.sis. 'I’o hazard an e.slimale, 
the type of scheme which is likely to be 
introduced will probably cost business, and 
the distribution trades in (larticiilai, about 
2t)m work days a year (this eompare.s with 
6,H4m which wert h^st from tlie total of 
industrial disputes in 19O9, aecording to 
Kcesings (Contemporary Archives). 

Tlic main, probably only, reason for this 
fantastically complicated and costly system 
i.s that it is considered politically impos- 
sible to tax food. It is time this basic 
a.ssumj^litm was questioned — anyway, food 
will, in effect, be taxed when we join the 
EECI. The Danes taxed food without caus- 
ing liardship because they have such a 
highly developed welfare system and were 
able to adjust rates of benefit accordingly. 
They also have a system of negative* 
income tax, which we have been puzzling 
about for years without making much pro- 
gress. At is becoming increasingly obvious 
that a large number of basic assumptions 
on which our economic life has been based 
for the past 40 years or .so will have to 
change. Unemployment at the million 
mark is likely to be with us for ever and 
technological development, which is itself 


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coming up against the ecological barrier, 
far from making this problem better, is 
likely to make it worse. 

Wc must, at some time, introduce a Vat 
if we are to join the EEC, but the Danish 
system is fully compatible with EEC 
membership; there is no need to follow 
.slavishly the French and Germans into the 
rnoras.s of their systems. Wc could use the 
necessity for a Vat as a cornerstone of 
a new ta.xation policy which might make 
some attempt to face the real problems of 
the late i97c»s. Instead, wc seem to be 
unthinkingly saddling ourselves with a 
monstrosity with all the disadvantages of 
purchase tax (discrimination) plus appalling 
administrative difficultie.s, while making no 
contribution whatsoever to solving problems 
wJiich arc .still small but growing every day. 

'J’he only advantage of a discriminatory 
basis for Vat with food exempt is that it, 
perhaps, makes it easier to avoid for the 
moment examining the real problems that 
face us and, by providing employment for 
15,000 civil servants and soaking up 20m 
work day.s in trade and industry, it 
temporarily ameliorates unemployment. 

The Government has got involved in so 
many politically difficult situations — the 
EEC, unemployment, Northern Ireland, 
.school milk, museum charges, lame ducks, 
all of which (I am sure, sir, you would 
except the EEC) would seem to lack even 
a germ of long-term benefit — that they 
might be persuaded to do one more 
politically difficult thing which would have 
t;normous advantages, and that is to copy 
the Danish system of Vat. — Yours faith- 
fully, C. J. Fell 

Newport, Essex 


Changing places 

Sir — You assert (January 8th) that, had 
Mr Christopher Chataway been bom in 
Wales, he would now be ready to take 
over his first cabinet post, as Secretary 
of State for Wales, and the chairmanship 
of the Conservative party. If his having 
been born in Wales would be a misfortune 
for Mr Chataway, then the misfortune of 
this event for the principality would have 
been even greater. 

The need for infusing fresh talent into 
the middle-upper ranks of this Government 
is, however, so pressing that the fact that 
Mr Chataway is not, by any stretch of the 
imagination, a Welshman will in no way 
act as a deterrent to Mr Heath. The choice 
of Mr Petei Thomas (rejected by a Welsh 
constituency in 1966), MP for Hendon, as 
Welsh Secretary 18 months ago showed 
almost as much contempt for the Welsh 
people as it did for Welsh Tory MPs. 

Your assertion is that the Welsh Secre- 
tary is a part-time post which can be 
combined with another. You appear to go 
further, expecting the brighter, more 
energetic Mr Chataway (should his promo- 
tion be feasible) to be able to devote a 
greater proportion of his time to much 
needed morale-boosting of Tory associa- 
tions, up and down the land. Under 


the BCWSOMWT JMWAMf I5, 

Labour, Wales had three ministers in the 
administration, all representing Welsh 
seats. It is little wonder that, so far as the 
Tories are concerned, Wales is a forgotten 
region, with now over 50,000 out of work ^ 
and close on half that number of jobs 
having been lost during the last 18 months. 
Wc arc back to the days when the then 
Home Secretary, Sir David Maxwell Fyfc 
(affectionately known as Dai Bananas), 
used to have to look after Welsh affairs 
as well as running his own great depart- 
ment of state! — Yours faithfully, 
Ammanford, South Wales Roger Thomas ^ 


We are sorry 

Sir — Your correspondent from Bru.s$el.s 
(Letters, December 23rd) cannot be an 
experienced air traveller. He cannot be 
aware of the popular saying “ if you have 
time to .spare — go by air.*’ To be specific, 
his first complaint concerned the fact that 
air crews should have adequate rest. It is in 
the interest of every passenger that the ’ 
crew in whoso hands his safety lies should 
never be tired and jaded. 

His .second complaint, of the bar not 
being open, is amazing in that usually the 
journey from Brussels to London takes less 
than one hour, and too much alcohol 
while flying is not good for one! I have 
met airlines where industrial action over 
the issue of cigarettes and drink would 
cause a total strike. 

His last complaint, that congestion at 
London airport caused a delay, will bring 
many a wry smile to air travellers who 
have been diverted to Manchester, Prest- * 
wick, or in some cases to continental air- 
ports, with extensive delays. 

I am not prone to praise British products 
or services because they arc not always as 
good as those provided by our overseas 
competitors but, having travelled by most 
European airlines, I can say without 
hesitation that BEA’s services are sometimes 
equalled by others but rarely .surpassed. — 
Yours faithfully, P. R. Davies 

Tunbridge Wells, Kent 


Orchestra lives 

Sir — While I appreciate that your Music 
Brief (December 25th) was clearly about ^ 
orchestras in London, the four regional 
symphony orchestras outside London and 
the Scottish National Orchestra (with a 
somewhat lower annual turnover than that 
quoted for London) operate on a basis more 
akin to that of Amsterdam’s Goncert- 
gebouw, although they draw only some . 
60-70 per cent of their income from public 
sources (Arts Council and local authorities) 
against the Bo pet cent of the Dutch 
orchestra. As the Peacock report showed, 
the other great difference between the 
regional orchestras and those in London is 
that the former spend over 90 per cent of 
their time on the public concert platform 
while the corresponding figure for London 
is about 25 per cent. — Yours faithfully, 

John May 

Orchestral Employers’ Association 
London, ECi 




9 


THE ECONOMItST JANUARY I5, 1972 




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THE ECONOMIST JANU^XrY 15» 197* 
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Ihc 

hconoinist 


January i^, ig'j2 


Haunted by Ulster 


The truth about Northern Ireland is that the place has 
not sulTercd sufficiently yet. Its people have .suffered 
more than enough in all conscience, individuals and com- 
munities, since before internment began, to have encour- 
aged a political settlement by now in a more comfortable 
society. But it has not been enough for most people, 
and most politicians, in Ulster. That is not surprising, 
except to English people and English politicians. The 
convictions of Ulstermen, both Protestant and Catholic, 
are not shameful, and it is the very existence of Northern 
Ireland which is the issue for all of them. It is, of course, 
inconvenient and humiliating for the British Government, 
which has more responsibility than it has j)owcr in 
Northern Ireland, that this should be .so, but that i.« 
another matter. The truth is that not the deaths, not 
the hurt, not the. damage, not the fear in Ulster have 
induced .my conciliation between its communities. And 
that, too, is not surprising : murder and internment 
were never yet mcth.ods of conciliation. 

There is no negotiation going on in Northern Ireland, 
nor is there hope of any. The constitutional plans of 
the prime minister, Mr Brian Faulkner, lie where he 
left them ; they were meant to conciliate Catholics 
who would be prepared to accept a reformed Stormon. 
system, not do away with it altogether. The Catholic 
cLiim has narrowed down to the demand that the 
interned should be released ; even the possibility that 
the interned might then be rearrested and charged, 
allowing some months for talks to begin before they 
were brought to trial, has been disowned by Catholic 
politicians. One Catholic, Mr Gerry Fitt, still seems 
to envisage a Northern Ireland solution ; another, Mr 
John Hume, is seen by other Catholics .as the agent of 
the Irish prime minister, Mr Jack Tynch, in the north ; 
some Catholic politicians arc openly identified with 
the IRA ; Miss Bernadette Devlin remains identified with 
revolution in both north and south. The Unionist major- 
ity will not let any of the interned out, it wants harsher 
intervention in Catholic districts, it would like its own 
vigilantes legalised, and it wishes the border with the 


republic closed. The official Unionists look over their 
shoulders at the Rev. Ian Paisley, and Mr Paisley looks 
over his .shoulder each day to discover if his flock 
currently prefers bigotry or populism. There is no one 
in Northern Ireland ready, or able, to negotiate about 
anything. ' 

To many people in Ulster this is very satisfactory. 
If there were talks their own particular bit of orange 
or green extremism might actually be talked away. They 
have not wearied of extremes yet ; on the contrary, the 
emergency is becoming a settled way of life in working 
class streets and housing ejstates and has even been 
welcomed as a new reality, or at least a gipiter reality 
than what preceded it. There arc moderate Protestants, 
a numbep of them in the Alliance party or at least out- 
side official Unionist politics, who .say they w'ould concede 
more, to the Catholics than Mr Faulkner thinks practical. 
There are Catholics, a few, who have been defeatist 
enough to give IR.A men away. But these arc the excep- 
tions. 

On to the peace of exhaustion 

Most Ulstermen now believe the stnigglc to be a make- 
or-break one for them, arc committed to it and so 
pursue it. While English politicians and publicists 
rehearse their plans and proposals, uncomprehending 
and incomprehensible alike, the Irish know that it will 
be exhaustion that will settle things and that the peace 
of exhaustion will be more likely to })roduce the right 
plan than any plan is to produce a peace. That is not 
a reason for brushing aside such plans as Mr Wilson’s 
and Mr Faulkner’s own, but which one is adopted and 
which is buried will depend on how the battle goes. 

This is wh.it haunts Mr Maudling on Ulster. He is 
a kindly realist ; bombings and shootings bore <ind weary 
him ; conciliation is in his blood. He, like the army, 
was not an advocate of internment ; he knew it was 
a gamble and he knew what would determine its success 
or failure in breaking the Catholic extremists ; he can 
judge as well as anyone what it has done and not done 




THE ECONOMIST JANUARY 15^ 1^7® 


in the past five months. If Non hern Ireland’s politicians 
had actually sat down to tajlks in Ijondon, although no 
one who knew Ulster believed they would, Mr Maudling 
would have been the best man to get them talking ; 
perhaps he will still get the chance to show what he 
can do, but for that he may have to go on being Home 
Secretary for longer than he would expect or like. Once 
internment had actually increased Catholic coliesion 
around the IRA Mr Maudling had no hope of getting 
his talks under way. But once internment existed Mr 
.Maudling could not end it altogether, erven to gel talks 
started (as Mr Wilson and Mr Clallaghan have recog- 
nised), unless he could alsf) enforce a complete Protestant 
surrender. Since the ProUrstants were, and are, no more 
weary of the battle than the Catholics Mr Maudling has 
had no option but to persevere, ajKl be haunted. 

British public opinion has weari(‘d even more of 
Northern Ireland since internment : this is the chief 
source of Catholic optimism, and the chief source of 
Protestant reservations alx)ut Mr Faulkner’s policy of 
playing along witli London. What was foreseeable on 
August 9th has happened : Britain has become steadily 
more ashamed of internment, stories of British atrocities 
have built up in the press and on television, the deaths 
and injuries among British troops in such a thankless 
pause arc increasingly questioned. Mr Heath has 
reasserted, ;md has meant it, that he will not let the 
majority in Northern Ireland down so long as it 
wishes to remain in the United Kingdom ; so, too, in 
his way, has Mr Wilson. Yet ministers have made little 
secret of their belief that the most siitLsfactory solution 
in the end would be if a political situation were created 
over the years in which the Prote^stant majority in the 
north could come to recognise! a future for itself in a 
united Ireland. That is not public policy, but it is a 
belief. To Northern Ireland mlinistcrs it is a belief basted 
on no reality. Tliat is w’hy they did not like Mr Wilson's 
public statement of the policy, and became all the more 
sus|)icious when it had so many compliments paid to 
it in London. Mr Wilson was trying, in part, to keep 
the Labour party behind him in a modicum of bipar- 
tisanship ; when he failed to do even that the Unionists 
felt justified in their doubts, but that still left them with 
no one to hang on to but the Tories. 

How little Lynch has to give 

Mr Heath and Mr Maudling, in their turn, have had 
no emtt to hang on to but Mr Faulkner, an unwearying 
realist and the man they still believe most likely to be 
in at the kill in Northern Ireland whenever it comes. 
There was also some hope of^ Mr Lynch in Dublin, 
a moderate man and a realist, too, who was not expected 
to let the IRA nm loose on his territory' and who, if 
he did, might be replaced by even less romantic Fine 
Gael and Labour men. But long before Mr Maudling 
had lost his temper with vhc BBC for not helping, 
Mr Heath had lost his with Mr Lynch for the same fault.' 
In fact, Mr Lynch, even if he had been treated 
differently, never had much to give. The moment he 
j^oised the south to the IRA, which would have meant 
internment, he v.^uld have lost his chief means of 


political i^essure on both Mr Heath and Mr Faulkner 
and also his chief source of moral persuasion in the United 
States and elsewhere. He doubted if Mr Heath and 
Mr Maudling could deliver the Protestants to him, 
were he even to want them just like that, and if he 
lined up with the British he would certainly lose his 
influence with the northern Catholics. 

Mr Lynch and his advisers have always pricked up 
their cars when there has been talk, or a threat, of direct 
rulle from London, because if the Protestants accepted it 
the prospect of a direct deal between London and Dublin 
one day would look more practicable. For that very 
reason, although they have no clear idea what would 
happen if London did try direct nile and they had 
to try a UDI, the Ulster ministci^s have constantly 
insisted that belief in direct rule is also based on no 
reality. Unless the Unionists themselves were to run amok 
in Belfast and Londonderry, or make Mr William Craig 
premier, they have good reason to calculate that a 
Conservative. Government with Europe on its mind would 
never wish 1o put it to the test. 

More reason to fight than before 

So the deadlock has gone on building up while the 
air has been hoarse with exhortations that something 
must be done. The army cannot defeat the IRA unless 
the northern Catholics arc detached from the gunmen. 
The Catholics cannot be detached unless internment is 
ended entirely. The Protestants cannot let internment 
be ended even partly unless Mr Lynch gives up the IRA. 
Mr Lynch cannot give up the IRA unless Mr Heath 
delivers the Protestants to a united Ireland. Mr Heath 
cannot deliver the Protestants to anything unless he has 
got direct rule, and he cannot expect to get direct rule 
unless the army first defeats the IRA. The best short- 
term hope of unravelling part of all that is a deal on 
the ending of internment, but that is precisely where, 
in public at least, both sides have been hardening again 
in the past month. It is the point, however, where war- 
weariness might be expected to show itself first, were 
it not that a concession by cither side there would be 
taken as admitting impending defeat. The best Catholic 
hope is a long haul, increasing British embarrassment 
and a Government pushed into imposing direct rule ; 
that is, detaching the British from the Protestants. The 
best Protestant hope is also a long haul, pinning the 
Catholic.vS down and a Dublin government pushed into 
a fight with the IRA in the south, The real malignancy 
of the situation is that there is now actually better reason 
for both slides to fight on in Northern Ireland than there 
was a year ago. 

Mr Maudling’s nature does not help him at this 
juncture. He is saddled with internment and the longer 
it has to go on the more he will become completely 
identified with it ; the time eventually arrives when the 
chance to put through a change of policy requires a 
new man. He is a patient operator, and even impatience 
is unlikely to get him flying back and forth to Belfast 
with h^eful formulae. But the charge is that he is 
lackadaisical. When the BBC stupidly offered him all 
of 2 1 minutes to explain his polity he stupidly lost hi? 



THE ECiOHOMlST JANUARY I5, 197R 


>3 


temper. But that was enough to brand him with advo- 
cating censorship. Mr Maudling’s job now is twofold : 
to impress on Ulster’s consciousness every sign that 
it is in process of destroying itself, mentally and physically 
(which would not be being disloyal to Mr Faulkner), 
and to do his best to prepare British opinion that it is 
going to be a long haul (which does not mean abandon- 
ing Ulster to itself). He may actually be helped now 
because the season for constitutional panaceas, plans for 
transfers of population, redrawing boundaries, dual 
citizenship and all the other impedimenta that have been 


going the rounds since 1921 is probably worked out 
for a bit, and also l)ecausc the world and the television 
crews are starting to move on to other problems. It 
shoidd be a time, to encourage British politicians and 
others to discuss some persistent problems in rNorlhern 
Ireland, such as discrimimition in employment and 
.segregation in schooling, which are ntore damaging to 
the ideal of a just and neighbourly society than any 
lx)mbs. The worst thing of all would be if he, now felt 
himself that Northern Ireland had l)ecome an albatross 
for ever round his neck. 



Nixon is willing 

President Nixon is poised for take-off towards re-election 
next November. Can he possibly be shot down ? 


To the surprise of no one, President Nixon announced 
last weekend, two days before his 59th birthday, that 
he was running for re-election. Already he seems 
somewhat out of breath from rushing around mending 
his fences, both at home and abroad, during the past 
.six months. But now, he hopes, the peace and prosperity 
that he has been cultivating so assiduously arc sufficiently 
well-established to grow into a fine crop of Republican 
votes next November. This depends, however, on two 
things : peace must not be blighted nor prosperity 
stunted meanwhile, and the electorate must forget, or 
at least forgive, Mr Nixon’s audacious reversals of the 
policies which secured his victory in 19H8. 

His old Republican supporters will have an opportunity 
to show how far they arc prepared to do this in the 
New' Hampshire primary election on March 7th. Two 
other Republicans are offering themselves there as presi- 
dential candidates : Representative John Ashbrook on 
the right. Representative Paul McCloskcy on the left. 
Neither has any chance of beating the President, but if 
their combined vote is sizeable, it would be evidence of 
an opposition within his party that Mr Nixon could 
not afford to ignore ; after ail, in 1968 his margin of 
victory over Mr Humphrey was less than i per cent of 
the total vote. 

Mr McCloskey is campaigning against the President’s 
failure to withdraw completely from Vietnam ; the 
recent bombing of North Vietnam may keep this active 
as an issue until March but, if the troops go on leaving 
at their prc.scnt rate, the war is unlikely to have much 
impact on November’s voting — among Republicans any- 
way. Mr Nixon’s greater danger is on the right since 
there waits Mr George Wallace, the southern reaction- 
ary populist who expects to stand this year, as he did 
in 1968, as an independent candidate for the presidency ; 
if he does he may draw off even more of Mr Nixon’s 
conservative support than he did then. 

So far there is no sign of defections by influential 
Republican right-wingers, such as Governor Reagan of 
Ci^fprpia or Senator Goldwater. But the need to keep 


contact with his right wing explains many of the 
apparent conflicts in Mr Nixon’s actions ; every liberal 
gesture must be countered by a con-servative one. So 
while Mr Kissinger was in P(;king arranging for the 
President’s visit there (that was the greatest of all 
shocks for Republicans on the right), the American 
delegation at the United Nations was over-exerting itself 
to try to keep 1’aiwan from being expelled, regardless 
of the damage which this attempt did to America’s 
prestige. So quotas and trade liberalisations are proposed 
at the same lime. So Mr Nixon allows his Vice 
President, Mr Agnew, to make reactionary (and very 
effective) speeches that Mr Nixon could certainly not 
make himself. And so, earlier this month, Mr Nixon 
endorsed Mr Agnew as his running-mate again this year 
— although this does not ensure that Mr Nixon will 
still choose Mr Agnew when the Republican candidates 
arc actually nominated next August. 

Conservatives in court 

But the President’s most important gesture to the right, 
and one which coincided with his own predilections, 
has been his appointments to the Supreme Court. 
It resumed its .session last Monday with Mr Nixon’s 
two new conservatives on the bench at last, after a 
damaging controversy about who they should be. 
Now four of the nine justices are Mr Nixon’s own 
appointees and he undoubtedly hopes that, by the 
summer, the court may have produced a scries of 
opinions, on such matters as the death penalty, legal 
procedures and civil rights, that will accord with his 
own desire for a “ strict construction ” of the Constitu- 
tion. In his view, and even more in that of real con- 
servatives, e.specially in the south, the court has in 
recent years ^en broadening the constitutional guaran- 
tees in a dangerous way. 

The President also completed last weekend the series 
of little summit meetings intended to calm the fears and 
soothe the susceptibilities of allied leaders who had felt 
disgruntled all last summer as he arranged to visit China 



{ ’14 

without telling them beforehand, and then disrupted 
their currency and trading arrangements also without 
Warning them. Now Mr Nixon, who used to denigrate 
summit diplomacy and who founded his political career 
on his anti-communism, can go to his meetings in Peking 
and Moscow sure, or so he thinks, that he still has the 
backing of America’s old allies in spite of the new 
independence that their growing economic strength has 
given them. He can hardly expect to come away from 
China, or indeed later from Russia, with much that is 
toncrete in the way of agreements. But at this stage that 
is hardly important to him ; even if he is totally rejected 
there, he can still claim in his election spccch(!s that he 
has started a promising new ventun' in international 
affairs, one that had long been needed hut that nobody, 
and certainly no Democrat, had dared to undertake 
previously. 

From present indications Mr Nixon is going to base 
his campaign on his foreign policy. From an American 
point of view there is little '.vrong with that. It will surely 
feature in his annual report to Congress on the 
state of the union next Thursday. But the rne.ssage, 
and the one on the budget wliich will follow, will also 
contain details of hi.s domestic programme for the rest 
of the year. He will be watched to see whether he revives 
the new revolution which he launched with such enthu- 
siasm last January, only to have it sink to the bottom of 
Congress. There are still bits of wreckage floating around 
from his proposals for revenue sharing wilh tlie states, 
for reorganisation of the government, for reform of the 
welfare system, for safeguarding the environment, for 
improved health insurance. But few, if any, of these 
pieces are likely to be salvaged, at least not in any worth- 
while form, in an election year by Democratic CiOrigress- 
men who will not want to give a Republican Pre.sidenl 
credit for anything if they can avoid it, or to jeopardise 
their own chances of re-election by taking stands on 
controversial matters. 

Phase 2 or phase out ? 

The President has been criticised for his failure to put 
any steam behind his revolution once he had launched 
it. The suggestion that to him the piogrammc was more 
of a political ganibit than a deeply-felt commitment was 
reinforced when he postponed the revolution for a year 
as part of his emergency pr<‘scription for the economic 
crisis in August. The important pans of that prescription 
were, however, the devaluation of the dollar abroad and 
the imposition of controls on prices and wages at home, 
both moves which .seemed inconceivable from a Republi- 
can President until Mr Nixon announced them. At the 
same time he also allowed the budget to run at the 
largest deficit there has ever been in America in peace- 
time. Together all these and other related moves were 
suppased to stop the rot in America’s international 
accounts, to restore confidence among businessmen and 
consumers, to check inflation and to create more jobs. 

The boom on Wall Street, the forecasts for 1972, the 
figures for retail sales, all confirm that confidence has 
returned, in part and for the moment, at least. Prices and 
arc rising less rapidly but the complicated series 



the economist JANUARY i^$ 

of controls, known as Phase a, is nol yet 
and may never work at all. More threatening tO Mr 
Nixon’s hopes of re-election, however, are the unemploy- 
ment figures ; they are stuck at 6 per cent of the labour 
force and there is no apparent reason to believe that 
they will improve much for some time, whatever the 
Administration’s economists may say. Ever since the 
great depression of the 1930s, recession has been the 
Republicans’ albatross ; for President Nixon not only to 
have been responsible for a recession while in office but 
also to have failed to reverse the trend, at least so far as 
jobs are concerned, even though he has reversed himself, 
would mean almost certain defeat for him next Novem- 
ber — unless the Democrats go into the election so divided 
that they defeat themselves. 


Changeable President 

Mr Nixon’s readiness to change direction, to contradict 
himself, is not necessarily a political liability. Pragma- 
tism and willingness to admit mistakes are political 
assets, although they need to be presented with more 
certainty than Mr Nixon frequently shows. Rut during 
the past years the impression has been growing that he 
has no long-term policies, no basic philosophy, that he 
moves from one unforeseen crisis to another and often 
handles them without sufficient deliberation or consul- 
tation. If his Vietnamese policy, if his Chinese and 
Russian policies, especially if his economic policy, 
succeed, all this will be forgotten next November by a 
majority of voters, at least. Meanwhile the country re- 
m<iins extraordinarily calm, especially after the violence 
and the protests of recent years. The President main- 
tains that it h;is regained its balance, that he has found 
the secret of orderly progress. But it is sometimes 
argued ^hat Americans are just shell-shocked. 


HuHo, Europe I 

The moment of Britain's entry into Europe should 
be an ideal opportunity for some fun and games, so 
that everyone can celebrate a moment of history 
and take a glimpse into the future. On page 59 The 
Economist puts forward the suggestion of a " Hullo, 
Europe I " exhibition to be held in London next 
summer. The real problems are where to put it and 
whether there is a public figure with the drive to set 
things moving. Could Prince PhHip follow Prince 
Albert's example and lead the way 7 If the exhibition 
could be staged, something would be done to stimu- 
late the kind of optimism about Britain-in-Europe that 
the Victorians created at the time of the 1851 Great 
Exhibition. But the important thing is that everyone 
could have a good time. 




I he 

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*5 



Because he's there 

Sheikh Mujib has gone home to his Bangladesh, and the rest of the 
world had better start sending its ambassadors there 


Shdkh Mujibur Rahman, the messiah of Bangladesh, 
was President Bhutto’s last hope for reuniting Pakistan. 
It is to Mr Bhutto’s credit that he realised there was no 
chance of extracting a commitment to reunification either 
from the Indians 01 from Mujib himself as the price 
for the sheikh’s release. So he made the grand gesture. 
But the Pakistani president did make a strong appeal 
to the Bengali leader in his last hours of incarcera- 
tion “ to find a link between the two wings.” And Mujib 
gave his answer at Dacca racecourse on Monday : “ The 
link is broken and it cannot be rejoined.” 

These words from the man whom Bengalis regard as 
the incarnation of their nationhood must be taken as 
the final ones on this emotive subject. There is no longer 
any possibility that the two areas which once were East 
and West Pakistan will be rejoined in even the most 
tenuous way. The existence of this alternative to Bengali 
independence, however remote, has been the main reason 
for withholding mcognition of the self-proclaimed state 
of Bangladesh. Another has been the reluctance of 
governments to imperil their ties with Mr Bhutto’s 
Pakistan. Significantly, east Germany, the first country 
after India and Bhutan to rccogni.se Bangladc.sii, had no 
representation in Islamabad. And Pakistan did break 
relalion-s with the second, Bulgaria. But now that Sheikh 
Mujib has issued his declaration of independence and 
President Bhutto himself seems to be preparing to accept 
it (see page 33; Bangladesh .should accepted as part 
of the international community. 

Recognition L not just a matter for lawyers and 
diplomats, for making a success of independent .state- 
hood is not the only possibility left to Bangladesh. Two 
others still remain : one is for it to slip under the 
suzerainty of Hs ally and protector, India ; another is 
for it to collapse into anarchy. Both are real possibilities, 
given the enormiius burdens weighing on the infant .state. 
Recognition will not eliminate these buidens. But it 
will lend Sheikh Mujib’s government that extra measure 
of support which it will surely need to resist internal 
and external threats to its precarious stability. Recogni- 
tion will also pave the way for the large supply of aid 
which is essential if Bangladesh is to keep its head 
literally and figurii lively alMve water. 

Sheikh Mujib’s ecstatic reception in Dacca this week 
proved that he possesses at least one quality vital for this 
formidable task of natitm-building — that indefinable aura 
called charisma. He has always had it : penonal 
magnetism was an important element in his overwhelm- 
ing election victory a year ago. But the man who was 
mobbed by half a million weeping and cheering Bengalis 
this week was more than just a successful politician ; 
he had been transmuted by eight months of imprison- 
ment into a laiger^han-life symbol of -the revolution. 


The new prime minister of Bangladesh has been 
criticised for allowing him.self to become a martyr in 
the first place. He could, it is said, have evaded arrest 
by the Pakistani army on March 25th last year and 
then taken charge of the independence struggle. This 
error of judgment may indeed augur ill for his future 
performance as the leader of Bangladcsli. But for the 
moment it gives him -an invaluable advantage. Precisely 
because he has spent the past eight montbs m a Pakistani 
jail, his image is not only untarnished but newly gilded. 
Unlike his colleagues who sat out the war in Calcutta, 
he cannot be accused of being an Indian puppet. (He 
showed his sensitivity to that charge on his second day 
of freedom by rejecting Mrs Gandhi’s offer of a lift 
home.) He will undoubtedly make enemies in time but 
at the moment, thanks to General Yahya, he is the 
single point of solidarity in Bangladesh. 

This is Sheikh Mujib’s trump card ; and nobody, 
including probably Mujib himself, knows whether he 
has others, including the ability to administer a war- 
tom country. He will have to use his advantage at 
breakneck speed, for even charisma has a way of wear- 
ing thin when people arc hungry, homeless and 
unemployed. This Ls not to suggest that any of the 
uncountable problems of Bangladesh are subject to a quick 
and easy remedy ; if the country is ever to stand on 
its own feet, its economy will have to be completely 
rebuilt and a political and technical administration organ- 
ised virtually from scratch. But the government’s 
performance in the first weeks and months will determine 
whether President Mujib and the Awami League will 
be granted the years needed for fundamental solutions. 
And in these weeks and months many powder kegs will 
have to be defused. 

The call for more blood 

The most dangerous of these is the popular thirst for 
vengeance which is being fed almost every day by the 
discovery of mass graves. Although he called for forgive- 
ness and asked Bengalis not to take the law into their 
own hands. Sheikh Mujib’s first speech to his people 
probably did as mudx to inflame passions as to subdue 
them. It may have been an understandable emotional 
lapse for a man who had only just learned about the 
atrocities inflicted on his people, but it was a mistake. 
He may have to give the Bengalis some symbolic trials, 
but his hopes of getting money quickly from countries 
such as Britain require the expression of vengeance to 
be over as soon and as bloodlcssly as possible. 

One way of relieving tensions would be to promote 
the speedy exodus of the million or so Biharis who have 
already declared their anxiety to leave Bangladesh for 
dther Pakistan or India. But the temper of Bangladedi 


i6 

will not be cooled until the multiple bahinis — mukd, 
mujib and assorted others — ^are brought under some kind 
of central control. Some guerrilla fighters have already 
been translated into an official army, navy and air 
force ; they provided an honour guard for the returning 
president. The rest are being asked to turn in their 
arms and join a national militia. But there is no sign 
that either of these attempts at reoiganisation is working 
on a large scale. 

In the short run the government may find it necessary 
to use local guerrilla forces to provide temporary admin- 
istrations in the areas they control. But the example of 
Mr Saddiqi, the so-called Tiger of Tangail, sliould stand 
as a warning that unless the government asserts its 
authority very soon it will have to deal not with student 
rebels on the run but with entrenched local warlords. 
The first test of the effectiveness of Sheikh Mujib’s 
authonty will be whether these Red Guard-style groups, 
which all claim loyalty to him, will obey his CMnmands. 

2om people and 500,000 tons of food 
HLs government will almost certainly have to draft the 
oiTganised guerrillas as shock troops for a programme 
of reconstruction. The home minister estimated several 
weeks ago that homes will have to be built for 20m 
people, including the returning refugees. The refugees 
who are slowly trickling back wdll undoubtedly set off 
a new wave of tensions because of the additional strain 
on limited resources, because of the property claims that 
will have to be settled, and because of the intcr- 


THB ECONOMIST JANUAEV I5, I97S 

communal conflicts that will inevitably arise in qitte of 
the present surface unity of Bengali nationalism. Shdkh 
Mujib’s long-standing cmnmitment to secularism will 
have to be translated into an active programme of com- 
munity relations if Bengali solidarity is to overcome the 
rivalries between different groups of his people. 

The deadline which India has set for the return of 
the refugees — the onset of the April monsoon — will mark 
a turning point for Sheikh Mujib and his colleagues 
as well. By that time they will have had not only to 
resettle millions of displaced persons but also to procure 
the half million tons of food grains which stand between 
Bangladesh and its first famine. No doubt India will help 
Sheikh Mujib over these hurdles by supplying grain 
from its own green-revolution stockpiles. Indeed, earlier 
this month Mrs Gandhi went so far as to claim 
that India could and would take care of all the needs of 
Bangladesh. But if these needs are at the level estimated 
by the Bangladesh planning conunission — $3 billion over 
two years just to get the country back on its feet — the 
result of a solo effort by India would be to push the 
third economy on the subcontinent to the verge of 
collapse. 

Sheikh Mujib does not want Bangladesh to becenne 
an Indian dependency. “ I need help from all the nations 
of the world,” he declared on Monday. And it is just 
as clearly in the interests of the rest of the world — even 
including India and its ally, the Soviet Union — that 
he be assisted in resisting this trend. The way for govern- 
ments to begin is by sending diplomats and money. 



Under western eyes again 

Mr Brezhnev's efforts to silence criticism inside Russia seem neither 
consistent nor conclusive, and some of his own mouthpieces 
sound curiously nervous 


Russia, like other communist states, is ruled by a few 
ageing men. They can count on the docility of a great 
part of a nation long accustomed to despotism, and only 
now acliicvmg the transition to a mainly urban society 
from a very backward ruial one. But they have no 
illusions about their populanty. The past few months 
have seen a rismg accumulation of evidence of that, up 
to the imprisonment last week of Vladimir Bukovsky ; 
and the evidence has been made available to people 
outside Russia by the regular appearance of the illegal, 
but apparently unstoppable, underground publications, 
such as “ Chronicle of Current Events.” 

The leaders of the Soviet Union rule with less of an 
iron hand than Stalin did 20 years ^o, but they dare 
not face an organised opposition. The average Soviet 
citizen lives better than he did in Stalin’s time ; but 
his masters know that appetite grows with eating, and 
that when the sheer struggle to survive is no longer all- 
absorbing people’s surplus energies may overflow into 
dangerous channels, So they are still forced to maintain 
a huge, costly and cumbrous apparatus of political 
policing in order to curb manifestations of dissent. And 


this apparatus is not working well. 

Ritually, at intervals, the people are marshalled to 
go through the motions of elections whose results are 
fixed, and known, in advance. Ritually, they are like- 
wise required to attend ” discussions,” in which their 
role is in practice equally limited ; all important questions 
are decided at the tup, irreversibly. A population that 
is increasingly literate and sophisticated is ceasing to 
regard these rituals as forms of participation in politics 
in any real sense. And it is irked by its rulers’ neurotic 
secretiveness — so much so that, on the occasions when 
Pravda tells the truth, many Russians suspend belief 
until they can check its version by listening to foreign 
broadcasts. 

Rusaa’s “sUent majority” is silent for a sufficient 
reason. Any exercise of the right of free Sjpeech that 
is, in theory, guaranteed by the Soviet constitution means 
trouble. Speaking one’s mind may lead to loss of pn»no- 
tion, of a job, of a chance to get a flat, of social security 
benefits, or of the right to further education Persistence 
in i^ieaking out brings harsher punishments : harassment, 
smearing accusations^ transfer to degrading wiMrk in 



■H6m tcfxttamfn: jAmMv 15, 

remote regioiis, persecution of the offender’s relatives 
and friends, and, eventually, imprisonment in conditions 
so cruel that many victims do not survive it. In these 
circumstances, what is surprising is that any sounds of 
protest are heard in Russia at all. 

In tsarist times the grip of the Russian police state 
was weaker than in Spin’s time because the political 
police were less efficient, because a well-bom young 
dissenter was sometimes protected by his influential 
relatives or friends, and because the regime veeied 
between bouts of severe repression and attempts to relax 
the pressure in hope of letting off some of the steam 
harmlessly. Some of these conditions now seem to be 
reappearing. Last week a searing account was published 
of the cruelties being inflicted on Andrei Amalrik, who 
has been sent to one of the notorious Kolyma prison 
camps in north-eastern Siberia after writing a book 
(banned, of course, in Russia) called “ Will the Soviet 
Union Survive until 1984 ? ” In some ways the more 
relevant approaching date for Russia now seems to be 
1905. That was the year when the tsarist fagade cracked. 

The veering tendency is again visible. In 1971 nearly 
14,000 Jews were allowed to leave Russia. Never before 
have the Soviet rulers permitted any such number of their 
subjects to leave the country. Their purpose in doing 
so was evidently to reduce the pressure not only of 
the Jewish Russians’ wish to emigrate to Israel but 
also of the protest movement as a whole. Throughout 
last year the regime also tolerated the existence of the 
human rights committee that had been formed in 
November, 1970, by a group of distinguished .scientist.s, 
of whom Andrei Sakharov is the best known. Its mem- 
bers protested repeatedly at acts of injustice that flagrantly 
violated the Soviet constitution itself. They suffered some 
harassment, and of course the Soviet press monopoly 
gave its readers no hint of their existence ; but the 
authorities failed to stop them circulating their protests 
abroad and, cir.ndestinely, inside Russia too. 

Last week Mr Sakharov was refused admksion to the 
cruel farce of a “ trial ” at which the young writer 
Vladimir Bukovsky was given a 12 -year sentence for 
protesting at the Soviet use of mental hospitals as places 
where political prisoners are confined and tortured. 


«7 

Nevertheless, the Sakharov committee’s protests about 
the rigging of the trial were, made widely known in the 
scientific and intellectual circles whose sympathy for the 
committee’s aims inhibits the ruling group whenever it 
is tempted to try to squash these nuisances 

The KGB is more efficient, and less concerned not 
to violate the forms of law, than its tsarist predecessor, 
the Okhrana, was. But, like the Okhrana, it now finds 
it wise to inquire into a suspect’s connections with 
influential people before taking drastic action against 
him. And it must be getting worried at the way it is 
now being repeatedly defied, even by people who have 
already been .scarred by its claws. The more punishment 
is meted out to those who circulate forbidden niat<'rial, 
the more such material is circulated. It is all uncom- 
fortably reminiscent of the way things were going 70 
years ago. The Russian opponents of despotism may 
still appear as weak and dispersed as they did at the 
time when Joseph Conrad wrote “ Under Western Eyes,’' 
but there is little comfort in that comparison for the KGB 
and its masters. 

The hammer flinches 

As the late.st attempts to retighten some of the screws 
proceed, rather hysterical notes are being .sounded by the 
hacks who serve the political police in (he Soviet press. 
Literatumaya Gazeta has solemnly tried to discredit 
Alexander Solzhenitsyn, the Nobel Prize-winning author 
of “ One Day in the Life of Ivan Deni-sovich,” by as.scrt- 
ing that his grandfather owned a large sheep farm. 
CGeoige Orwell could tell who owns it now.) The Novosti 
agency, whose comment on the Bukovsky trial was 
unusually stomach-turning even by its own standards, 
is becoming .shrill about alleged attempts to subvert army 
officers. It seems to be getting harder to find anything 
to say that will not put undesirable ideas into people’s 
heads. If one contrasts the few small visible signs of 
dissent with the colossal apparatus of repression that 
overhangs them, it is not easy to understand why the 
repressors should show such nervousne.ss. It is as if a 
sicam hammer were to get the jitters on being con- 
fronted with a nut. But perhaps this particular steam 
hammer knows something about the nut that we don’t 
know. 



Smog over Stockholm 

The great international environment conference is in trouble 
because of another argument about divided Germany 


Environmentalists in government and outside have 
invested high hopes in the United Nations conference 
on the human environment in Stockholm next June. To 
them it is evidence that the cause for which they 
have campaigned, especially in the United States, has 
been given proper recc^nitioii, and they count on 
Stockholm beginning an international eflort against 
pcdlution of the earth which alone, they believe, can 


rescue human society from the greatest perils that now 
confront it. This is a cogent argument (although there 
are others, also cogent but much more soothing, about 
the future of the environment) and it is politically 
a popular one: President Nixon and his Democratic 
opponent next November are as likely to .campaign 
against the environment as they arc against Santa Claus. 
It should be no surprise to anyone, therefore, that the 



i8 TBS BcnNomsT j/utOABY 15 , igiTs 


Russians seem to have tied their ‘and their friends’ 
attendance at Stockholm to a bit of old-fashioned 
central European power bargaining; they seem to want 
the western powers to recognise east German 
sovereignty first. 

That may be being unfair to the Russians, of course. 
Since they have persistently denied in public that 
pollution is anything other than a disease of capitalism 
and cannot exist under socialism, they have found it 
very difficult to admit that they arc concerned about 
it and have as much reason as anyone to be so. It may 
just be that they arc looking for an ex< use not to turn 
up. Other UN observers say they would not be sur- 
prised if, in the end, the. Russians arrived in Stockholm 
anyway: they are like that. Hut at the moment the 
Ru&sians are making a real problem out of it. 

If they don’t come, we may not either 
In the closing days of the recent General Assembly, 
the western powers secured flie adoption of the so-called 
“ Vienna formula ” as the basis for participation at 
Stockholm. This formula admits to full official partici- 
pation in UN conferences thase governments which are 
already members of the United Nations or its agencies. 
West Germany, as a member of the agencies, scraped 
through ; east Germany did not, although it was offered 
observer status at Stockholm. The Russians, who had 
taken part in preliminary work for Stockholm, went 
very quiet. A visit by the conference’s secretary-general 
to Moscow has been cancelled and no Russian repre- 
sentative has appeared at recent preparatory meetings. 
A total east European withdrawal is now possible. 

Conceivably, the Russians, having felt obliged to put 
more pressure on the east Germans over Berlin than 
they liked, are now using the Stockholm issue to extract 
a quicker recognition of east German sovereignty than 
the present state of negotiations between the two Ger- 
manics makes desirable for the west. So the first reaction 
to the Russian pressure is likely to be that these 
negotiations arc much more important than excessive 
CO* in the atmosphere or the risk of eutrophication 
in enclosed waters. West Germany’s loyalty to the 
western connection, the coherence of the European 
community, even the durability of Atlantic understand- 
ing and co-operation could be jeopardised by suddenly 
jumping into a manipulated act of recognition of east 
German sovereignty simply to keep a postponablc 
conference going. If the Russians want to play politics 
with the environment, the result is unfortunate, no 
doubt. But do not let anyone lose much sleep if, after all, 
the Russians do not turn up. 

Yet the issue may not be quite so clear. It can also 
be argued that there is a rising general expectation 
that cast Germany will enter the United Nations system 
some time in the next 12 months. Since east Germany’s 
new status, even under a beastly regime (sec page 32) , 
is likely to be admitted shortly, what more acceptable 
and more realistic grounds can there be than that 
it is a powerful industrialised state, plays a 
part in the degradation of central Europe’s air, streets 
apd river systems and contributes directly to the sewage 


and run-off which have already deprived some parts of 
the Baltic of a iai‘ge part of their essential oxygen? 
Since it must always be a blow to the Federal Republic 
to admit east German sovereignty, is it not better that 
it should happen in a field where material fact makes 
it advantageous that the east Germah government’s 
authority be recognised ? 

There is another environmentalist aigument. 
Germany’s division is, after all, part of a much wider 
problem — the creation of a European framework of 
lasting calm and security as both the hopes and the 
animosities of the 1945 partition recede into history. It 
is quite clear that the present de facto settlement depends 
upon one fundamental necessity: the continuance of 
America’s commitment to Europe. That is likely to per- 
.sist anyway for good political and military reasons. Yet 
there are evident signs that a profound sense of disen- 
gagement from world affairs has set in among much of 
the American public since it grew tired of Vietnam. 
Disillusion with “ free world allies,” with the common 
market, with free trade, with development is widespread. 
The Eastern Establishment which gave leadership in 
these fields has undergone a sharp diminution in influence. 
The internationalists whose enthusiasms supported the 
United Nations have even le.ss. 

But there is a new generation of internationally- 
committed people, young and old, who argue in a quite 
new way that the United States can no more withdraw 
from the world than it can lake off into space. The 
environment lobby’s voting power is already so far 
from negligible that oil, highway and real estate interests 
have been curbed by it. No one will pretend that the 
environmentalists are dedicated supporters of an Ameri- 
can commitment to Europe. But they arc realistic sup- 
porters of an American commitment to world responsi- 
bUity, add from this conviction flow an outward- 
lookingness and a disbelief in the cheap answers of 
isolation which are safeguards against a resentful and 
small-minded spirit of retreat. So if, in an election year, 
the Stockholm conference, the first great symbol of en- 
vironmental co-operation, is cancelled or postponed the 
risk is that the latest sizeable popular force making for 
internationalism in America will be profoundly dis- 
couraged. 

Is it a bluff ? 

If the Russians insist, at this late stage in the prepara- 
tion for the conference, on a recognition of east (^rmany 
as a prerequisite for considering the human environment, 
they cannot fail to stand convicted by all those who 
judge Stockholm to be (tf pre-eminent importance of 
caring more for turning an immediate pcditical trick 
than for the ultimate he^th and survival of a planetary 
system they arc compelled to share. Very likely they 
will not go through with it, anyway : they try these 
things on often enough. But that in itself does not make 
the issue one that western policy-makers can treat, in 
their turn, simply as one of routine manoeuvre or short- 
term advantage. It is a matter on which Mr Nixon, on 
his Moscow visit, may have to have a good answer 
ready, not least for consumption at home. 



TRB SOONOBUST JANUARY I5, 197a 


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20 


rm BQONDIOST JANUAKY 


TURNER 
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LIMITED 

Profit planning success 


Points from the Statement by the Chairman, Mr. R. M. Bateman 


Profits up at home and abroad 

Rationalisation and cost reduction at home combined 
with a late upturn in some markets to increase home 
profits by over 16%, overseas profits up nearly 10% 

Total sales and exports both records 

Total sales .turnover up by nearly 8%; exports reach 
new record level ot £23.233,000 

Hopes for Rhodesian asbestos 

Political settlement would re-introduce Rhodesian 
asbestos mining into total of Group's interests, en- 
suring proper balance between mining and manufac- 
turing and recreating close and mutually beneficial 
relationships 

Monopolies Commission Inquiry into 
asbestos 

Final hearings expected early 1972 Report to be 
published thereafter. Extremely high cost in time and 
money 


Capital expenditure exceeds £8,000,000 

A little more than last year. Net financing charges up 
sharply by £1 ,000,000. No short term liquidity problem 

R8tD expenditure continues high 

New Fibre Research Unitwill investigate use of syn- 
thetic fibres, particularly as reinforcement in composite 
materials 

Personnel appreciated 

Improved performance the result of loyal effort in in- 
creasinglydifficult conditions. Redundancies have been 
dealt with as considerately and generously as possible 

Difficulties ahead ; economies to 
continue 

Upward pressure on wage levels, price restraint, 
monetary and political problems, wars and threats of 
war make future more than usually uncertain 


Salient figures from consolidated accounts 

Year ended 30th September 1 971 1 970 


Sales to third parties 
Direct exports from U.K. 
Trading profit 
Profit before taxation 
Profit after taxation 
Retained in the business 
Net assets employed 


£ 132 , 071,000 

23 . 233.000 

13 . 536.000 

15 . 076.000 

8 . 863.000 

1 . 458.000 

133 , 642,000 


. . £1 22.366,000 

22.405.000 
. . 1 2,005,000 

14.045.000 

7.837.000 

1.794.000 
.. 117,464,000 


NOTE: The accounts of Rhodesian subsidiaries are excluded 


Dividend: Interim and final div 
last year 


dends totalling 1 0.75p per stock unit equalling the total of the dividend paid 


The Annual General Meeting will be held at 36 George Street, Manchester on 3rd February at 1 2 noon 



THE QUEEN'S AWARD TO INDUSTRY 

1969 FERODO LTD 

1969 DEEGLAS FIBRES LTD 

1971 TURNER BROTHERS ASBESTOS CO LTD 



TURNER 

ANEWAU 

UNITED 


TAC Construction Materials Ltd • Turner Brothers Asbestos Co Ltd • Ferodo Ltd • Newells Insulation Co Ltd 
British Industrial Plastics Ltd • Engineering Components Ltd • Turners Asbestos Fibres Ltd • Raybestos-Belaco Ltd 
Turners Asbestos Cement (Nl) Ltd and 32 overseas mining, manufacturing and marketing companies 





TUB BOONOMIST JANUABV >5, 1973 


21 




Chataway will tell the ITA 
to go thataway 


Shortly after the House of Cammons 
returns nexit week, Mr Chris Chataway, 
f the Minfeter of Poi^te and Telecom- 
munications, wall announce the Govern- 
ment’s dediision on 'the Independent 
Television Authoitity’s request for per- 
mission ito set up a second oommeroial 
•television channel immediately. Unless 
there as a last minitte dhange of heart 
— and ithat is not escacftly Mr Heath’s 
style — the answer wfill be no. Bot before 
the Labour party and all the protest 
groups throw ithdir hats in the air they 
shoulld be ^varned that it wiill not be 
an absolute no : what Mr Chataway 
will say is that there will be no fourth 
rjational channel before 1976, when 
the BBC’s charter and the commercial 
television contractors’ and cable com- 
panies’ franchises all lapse. 

It seems a pity that Britain must 
wait for nearly another five yeans for 
a fourth tclevisi6n channel w<hen the 
production capacity and the talent are 
there to service lit. What is apparently 
stlill undecided is whether the Govern- 
ment will use this delay to advantage 
by setting up a small but high-powered 
inquiry into the future organisattion of 



CAiisii¥«y : iMfH top$y? 


televiitsion after 1976. Mr Health is not 
temperamentally attracted to commit- 
tees of inquiry in general, and there Ils 
no evidence that he has gone back on 
the firm view he held in opposition 
that (there is no need ‘to pull television 
up by the roots to have another good 
look at it. He could still change his 
miind— after all, there is now some 
irony in another sentence of his in the 
e»ame speech : “ T!;ere is no problem 
in broadcasting and television which 
cannot be scittl^ amicably and sensibly 
wiitih the BBC and the Independent 
Television Authority by any govern- 
inent.” 

The argument for an inquiry is not 
that it would get all the protest groups 
off the Government’s back r ithat sort 
of argument is unlikely to cut much 
ice widi Mr Hea'th, although it has 
alttraotions for some of his colleagues. 
But most of the suggestions Which have 
Ijeen pul forward for itlhe organisation 
of the available fourith 'television chan- 
nel are either impraotiically idealistic 
or nonsensical. Whatever the defects 
of :t!he ITA’s submission for the second 
dhannd to be run as a complementary 
service to ITV-i by the present pro- 
gramme contractors, it comes much 
closer than most other schemes to recon- 
ciling idealism With reality. The need 
is not so mudi for a committee to 
decide what should be die organisaition 
of television after 1976, ais for a body 
whose findings on the possible 
alternatives would be accepted as 
authoritative. That means a committee 
drawn very largely from people with 
experience of the industry itself, and 
not the usual modey coHcction of 
academic worthies, retired trade union 
officials and stars of stage and playing 
field. 

For it is not simply <the posubiKt&es 
of expanding the off-a!ir television chan- 
nels which need <to be examined, but 


the whole queastion of cable television 
a:s well. Many politicians would rather 
stifle discussion of cable television than 
l>ress for Britain to got in reilatively 
early on what will undoubtedly Ik* *thc 
communiica'ljions system in most 
advanced western countries by the end 
of the century. That is understand- 
able, >fbr a national cable network cap- 
able of carrying between 30 to 40 
television channels would rob the poli- 
'tlcians of their main justification for 
coiTtrClling the oiganisation of radio 
and television. 

The comrnittee which has been con- 
sidering the future technical possibili- 
ties of television should have nepoitted 
to Mr Chataway by last autumn but 
bias fallen behind schedule. It looks, 
tihough, as lif Mr Choitaway will permit 
a linrMted experiment in cable television 
anyway. In Woolwich, in .south-east 
London, one of the local MPs, Mr 
Chris Mayhew, is supporting a cable 
a>mpany\s request to run a local com- 
munity station. This service would noit 
carry advertising — -Mr Mayhew would 
lead a campaign against it if it did — ' 
and would flirn'k itself to local produc- 
'tiion of programmes of 'Strictly local 
appeal. If anyone wants to risk 'his 
money in that way that lis his affair, 
and the experiment miglhit at least prove 
the po»inft that the only thing wrong 
with community television is that very 
few people want to watch it. The 
danger if that happens is that there 
Will be too many people ready to argue 
that it was cable ranher than com- 
munity itelevision which had failed. The 
best a'titli tude to -take towards the Wool- 
wich experimen't is to be slightily sus- 
picious. 

Meanwhile, how will the ITA and 
the ITV programme companies react 
to the Government’s rejection of iheir 
request for a second commercial chan- 
nel ? It is doubtful if any of them will 
be surprised. But what most of them 
will hope for is that Mr Chataway will 
mollify theii supposedly hurt feelings 
by lifting 'the restriction on 'the number 
of hours they ore allowed to transmit 
each week ; that lis what most of them 
reaitty wanted anyway. The BBC does 
not want extra hours — 'it has m posri- 



32 

bility of extra inoonie from them, uiiSce 
the programme contractors — and that 
itself will make the proposal attractive 
to many on botli sides of the Commons. 
Mr Chataway cares too deeply about 
television to be influenced by such 
petty considerations, but it is absurd 
to restrict the hours of ITV merely 
because the BBC does not want any 
more air time. 

Labour party 

All together now 

The Government could be in for a 
mildly embarrassing time in Parliament 
next week. The anti-marketeers in the 
Opposition shadow cabinet believe that 
they can give Mr Heath a nasty fright 
when the Commons vote on their 
motion on the EEC treaty, and 
although they are probably over- 
stating tiieir strength once again it is 
certainly quite possible diat the 
Government will not emerge with a 
particularly comfortable majority. 

But it would be a mistake to read 
too much significance into any of this. 
For the motion, which will be debated 
on Thursday, is drafted in such narrow 
tenns that even the sturdiest pro-market 
Labour MPs can vote for it. But it is 
impossible to believe that many of them 
will really accept its logic ; to demand, 
as the motion does, that the Govern- 
ment should not sign the treaty of 
accession before the full text has been 
published raises the interesting ques- 
tion of why the Attlee government 
signed the North Atlantic Treaty 
before its contents were known. 

Nevertheless, though the motion is 
wholly without merit, it will at least 
ensure that the Lalx)ur party will have 
the agreeable experience of finding all 
of its MPs in the same lobby in a vote 
on Europe. The same is unlikely to 
hold good for the lories. It is quite 
possible that Mr Powell and one or two 
of his friends will vote with the Oppo- 
sition, and that a few more will abstain. 
But it is hard to l>elieve that there will 
be a major Tor/ rebellion. Few Tory 
anti-marketeers will want to incur the 
wrath of party loyalists in their con- 
stituencies by voting in the Labour 
lobby any more than Labour marketeers 
will rebel on a secondary issue. 

It seems that this is Mr Wilson’s 
view tOQj for if he believed that there 
was any possibility of doing serious 
damage to the Government it is 
unlikely that he would have entrusted 
Mr Peter Shore with the task of opening 
the debate for the Opposition. But 
some of Labour's more balanced anti- 


BRITAIN 

Europeans have persuaded themselves 
that the Government can be brought 
down on the EEC, and the Labour 
marketeers will be under immense 
pressure to make life rough for Mr 
Heath. 

Conveyancing 

Playing scales 

The solicitors have made public their 
quarrel with the Lord Chancellor over 
his proposals to reduce their convey- 
ancing charges, but at a time when 
house prices are rising by some 15 per 
cent a year fixed scale charges are 
harder than ever to justify. Lord 
Hailsham, as chairman of the commit- 
tee which fixed solicitors’ fees wants to 
make the scale a maximum rather than 
a fixed charge, and to aoolish it alto- 
gether for houses costing over £iu,ooo. 
He also wants solicitors acting for both 
parties in a conveyance to earn one 
and a half fees instead of two full 
ones — ^at least so long as solicitors are 
still allowed to act for both sides, a 
practice which is often criticised. 

These proposals, first made last 
October, follow the mounting evidence 
presented in three successive Prices and 
Incomes Board reports on solicitoi’s' 
pay, although the PIB put forward 
some different solutions. So far only its 
suggestion to increase fees in the 
unprofitable lower end of the convey- 
ancing market has been implemented, 
and then by much more than the board 
suggested. After that (in March, 1971) 
the PIB proposed that gross con- 
veyancing income should be cut by 
some £6m a year by reducing 
the differential on unregistered land, 
introducing new, lower charges for 
mortgage work, and introducing the 
scale for joint transactions. The board 
had already supported the idea of a 
maximum scale, but proposed to 
abolish it only at £20,000. 

The detailed survey of solicitors’ 
costs and charges published in the last 
PIB report showed that big profits were 
toeing made from ever more and more 
valuable conveyances. On houses 
costing between £10,000 and £20,000 
(no longer unusual in south-east 
England) the average bill of £90 com- 
pared with costs of £26.01. The bulk 
of houses in the survey fell in the 
bands £2,ooo-£4,ooo and £4,000- 
£6,000, wliere average bills of £48 
and £58 respectively represented well 
over twice the costs. No wonder 
solicitors fear price-cutting if the fixed 
scale goes. 

There is some truth in the argument 
that profitable conveyancing subsidises 


tim BQbiidift^ jANUjm 1% 197a 



Haitsham : no fixing, please 


unprofitable court work, and that 
expensive houses subsidise unprofitable 
work on cheap ones for poor people. 
But solicitors who do much court .work 
usually do little conveyancing, and 
vice-versa. And if they practise in poor 
areas there are not many rich men’s 
houses anyway. In any case reduced 
charges could still allow for that. 

The Law Society says that buyers on 
a narrow budget want to know where 
they stand on essential chaiges — but 
do they really rate this as more im- 
portant than an almost certain reduc- 
tion in fees on houses over 
£10,000 ? Solicitors also retort that 
stamp duty could be reduced, or 
abolished at a higher level than the 
present £5,500, and that the Land 
Registry cx>uld charge less. But since 
estate agents officially abandoned 
scale fees last year, another tu quoque 
is not available. 

Local government 

Brummie accents 

It is an unusual spectacle in big city 
politics nowadays to find all the parties 
in a town hall ready to join hands in 
a struggle against a decision of die 
Government in London. But that is 
what is happening in — of all places — 
Birmingham Ckiuncil House, where the 
political machines have fought eadh 
other, usually with extreme bitterness, 
ever since the Liberal heyday of Joe 
Chamberlain in the 1870s. Mr Peter 
Walker’s proposals for Britain’s second 
largest city in his massive local govern- 
ment bill, now in its committee stage, 
have outraged both die Tories and &e 
Labour party on the council. Last 
month a resolution ctmdemning the 
bill was actually passed through the, 
council chamber by 133 votes to one. 
It was moved by Alderman Sir Frasets 


Tin sco^Mnt jAMVARy 15, 1972 


All of Ikne jeeunliea hanog been sold, lUs announcement appears as a matter of record only 



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Limited 

Goldman Sachs International Corp. 

Randelsbank in Zurich (Overseas) 
Lim-iied 

Istituto Bancario Italiano S.p.A. 
Kleinwort, Benson (Europe) S.A. 
Kuwait Investment Company S.A.K. 
Lloyds & Botsa International Bank 


Dewaay, Cortvncndl International S.A. 
Lurocapital S.A. 


L dilcentro S.p.A. 


Antony Gibbs & Sons 
l.inriiteU 


Dillon, Read Overseas Coiporalion Drcxel Firestone 

)nci>rpor4lt:d 

Finacor The First Boston Corporation First Chicago 

Lirniiecl 

Girozentralc und Bank dcr bstcrrcichisclien Sparkassen 

Akliri\KrHrllM.hAri 


Greenshiclds 

Incorporated 

Hill SaiTiuci &. Co. 

LimiU'd 

Japan International Bank 

Limited 

Krcdicthank N.V. 
Lazard Freres & Cic 
Locb, Rhoades &. Co. 


Giiiinar Bohn Sl Co. A/S 

Huare & Co., Govctl 


Gutzwillcr, Kui/. Bungencr Securities 

I.imiicd 


Hambros Bank 

Limited 


The Hongkong and Shanghai Banking Corporation 
Kidder, Peabody K Co. Kjobcnhavns HandcUbank 

Incorporated 

Krcdictbank S.A, Luxcmbourgcoisc Kuhn, Loeb & Co. International 

Lazard fTcrc.s & Co. 


Jardiric Fleming & Company 

1 imiicd 


Merrill Lynch, Pierce. Fenner & Smith 

Securities Underwriter Limited 


Lehman Brothers Lepereq, de Ncuflizc & Co. 

Incorporated liicoi pouted 

London Multinational Bank (Underwriters) Manufacturers Hanover Merck, Finck &. Co. 
Limited 1 itniied 

B. Mctzicr sccl. Sohn &. Co. Model, Roland A Co., Inc. Samuel Montagu & Co. Morgan Grenfell & Co., 

Limited Limited 

Ncdcriandsche Middenstandsbank N.V. Nesbitt, Thomson The Nikko Securities Co. International, Inc. Nonuira Securities International Inc. 

Limited 

Den norske CredUbank Sal. Oppenheim jr. Sl. Cie Orion Bank Pctcrbroeck Van Campenhout Securities S.A. Pictet Intcrnaiional 

Limited Limned 

Pierson, Heldring Sl Pierson Privatbanken i Kjobenhavn Rea Brothers N. M. Rothschild Sl Sons Rowe & Pitman Schroder, Munchmeyer, Hengst & Co. 

Limited Limited 


J. Henry Schroder Wagg & Co. 
LlikilMd 


Singer Sl Friedlandcr 

Limited 


Joseph Sebag & Co. 

SocicUi Nazionale Sviluppo SociSXi C^nirale Society Gcn6rale de Banque S.A. 

Sveriges Kreditbank Swiss American Corporation 

Union Bank of Switzerland (Underwriters) Vercinsbank in Hamburg 

Ltffliied 

Westc^. American Bank (Europe) Westfafenbank White, Weld Sl Co. Williams, Glyn Sl Co, 

UmlM iUttkaiwIlKhallL Limited 

13th Januaiy 1972 


Swiss Bank Corporation (Overseas) 

Limiteu 


Skandinaviska Enskilda Bank 
Strauss, Turnbull Sl Co. 

C. G. Trinkaus Ullrafin International Corporation 


Smith, Barney & Co. 

Incorporated 

Svenska Handclsbanken 


S. G. Warburg & Co. 

Limited 


W'ood Gundy 


Westdeutsche Landesbank 
Giro/entrale 

Yamaichi Securities Company 
ofNew York Inc. 


(Mens Sana in carpore 


coin a phrase.) 



Playing the game counts more than winning. (Baron Pierre de Coubcrtin} 


Swissair sees one of its pre-enninent 
functions in bringing the youth of the world together 


SPORTS FANS may 


Lhavc heard, the Winter 
Olympic Games are being 
held at Sapporo in February. 

(A cordial word of thanks 
in advance to all the con- 
testants tor the outstanding 
abilities displayed. A loud bravo to all 
those who will head for the games by 
one of our daily Far Fast flights; and wc 
too take pleasure in showing what we can 
do high up.) 

And then in the summer the Olympic 
Summer Games will be celebrated at 
Munich You can't imagine how this de- 
lights us. 

After all, it gives us an added oppor- 
tunity to enter into rigorous but chival- 
rous competition with our rivals, flying 
as many athletes and spectators as po.s- 
siblc from all over the woild to the heart 
of Furopc. 

We can truthfully claim to be well 
equipped for this peaceful contest. (DC-8s, 
DC-9s, Boeing 747 Bs, soon DC- 10s.) 
The crew has trained down fine m thou- 
sands of flying hours, their trim is excel- 
lent, the coaching has never been better. 
And what may turn the balance: We're 
wonderfully manned in all positions. 
We're at 79 destinations on four conti- 
nents. And wc’Il fly you from there (in 


for games of friendship and 
international brotherhood. 


To repeat, we’re extreme- 
ly fond of sports, the world’s 
most glorious non-essential. 

But assuming they don't 
say anything whatever to 
you, you can still drop by 
the Lucerne Festival Weeks 
ca.se you mean to ski in Austria, onlook || on your European trip. Enough golden 


in Munich, rest up in Switzerland, pursue 
the arts in Italy, or do business in France) 
to the middle of Europe. And crisscross 
througli Europe. Wc hope to show the 
competition what we mean by a passing 
game. 

When we fly you from all over the 
world to Europe, though, that's only 
one side of the (gold) medal. The reverse 
is that we’ll fly you back (after you’ve 
done business in Germany, toured Switzer- 
land in Switzerland, met an old flame in 
France, and watched football in Italy) 
from Europe to all over the world. We 
play jump center in the world 
of events, as it were. 

After all, “higher, further, 
faster” (the age-old dream of 
the athlete) has long been our 
very own ambition. It has 
brought us valued triumphs 
on long runs and short. It 
keeps urging us on; lends us 
wings, you might say. 


throats th<Tf- for a few medals And 
instead of the puck there arc pizzicatos 
(which do sometimes rise to an allef^ro 
J'urioso). 

P.S. Below, you see a Joss table. Jassing 
IS the Swis. 1 t national passtime, (A card 
game, and incidentally wonderful elbow 
exercise: first you have to fling the cards 
down in succession on the table, and then 
you keep carrying glasses of wonderful 
Swiss white wine to your lips. The winner 
is the one who drinks most and pays 
least,) 






tini abbitoifast jAMUiUtY 13, 1973 

GrifBn, the ooundl’s Tory leader who 
has run Birmingham for the past six 
years, and it was seconded by Labour’s 
new leader, Alderman Ernest Horton, 
who h<^)es to be in power after the 
May local elections. 

Birmingham’s politicians have num- 
erous objections to the Government’s 
bill, which they claim will mean the 
dismemberment of the city’s municipal 
government. Its all-puipose authority 
with a distinguished century-old tradi- 
tion of civic improvement will dis- 
appear. After April, 1974, the city is 
to become merely one of the seven 
district councils with limited functions 
under the umbrella of the gigantic 
West Midlands Metropolitan County 
Council which is to sprawl from the 
Black Countiy down as far as Coventry. 
Some politicians deplore the likely loss 
of Birmingham’s wide planning powers 
which have enabled it of late, for 
instance, to construct an imaginative 
inner ring road and embark on a £4m 
central library complex. Othen detest 
the unpalatable fact that the city will 
not be able to dominate the new county 
authority with an allocation of 40 of 
its 1 00 elected seats. 

The Labour party, in particular, feds 
strongly about the reduction under the 
bdl in the number of councillors in the 
Council House from the present 156 
to 80. It believes this is too few to 
make an effective representative body 
for a population of over i million. Some 
Tories resent the disappearance of the 
aldermanic bench, and several distin- 
guished committee chairmen have said 
openly that they will not serve on any 
of the new authorities. They include 
Alderman Griffin, who last week 
resigned from the Ohairmamhip of the 
West Midlands Passenger Transport 
Authority. 

In Birmingham eyes the most con- 
tentious of all Mr Walker’s proposals 
are the tightly drawn boundaries 
planned for the city’s district council. 
Local Tories feh well pleased with 
what was proposed in the Government’s 
white paper last February. They were 
not much concerned that four of the 
city’s outer wards in Hall Green should 
be placed under tire authority of Soli- 
hull district council for, at the same 
time, the Government said that Sutton 
Coldfield and the ovmpill areas of 
Ohelmsley Wood and Kingshurst should 
come under Birming'ham’s jurisdiction. 
In the event, the Government changed 
its mind. In the November bill it was 
decided to keep the Hall Green wards 
within the city— a reward for the per- 
sonal efforts of the local Tory MP, 
Mr Reginald Eyre, who is a govern- 


nunraiM 

ment whip. But Mr Walker also 
decided to exclude Chehnsley Wood 
and Kingshurst from Birmingham dist- 
rict council and place them under 
Solihull’s authority. 

This is what has caused much of 
the fuss, for it will mean that llie city’s 
airport, which gets substantial help 
from the rates, and the city’s planned 
national exhibition site at Birkenhill 
are to be outside Birmingham’s 
extended boundaries. So are the 14,000 
council houses which are occupied by 
some 60,000 fonmer Birmingham slum 
dwellers at OheJmsley Wood. Birming- 
ham fears it will forfeit the re-lets on 
these houses. And it will lose an ideal 
area in Which to build houses for those 
Brummies who are still in slums. Bir- 
mingham hoped to complete its massive 
slum clearance programme by 1974, 
but in recent years the council has 
found it very difficult to acquire 
new land for housebmlding purposes. 
In 1967 the Tories manag^ to build 
9,000 new houses, but last year only 
3,800 were completed. The council has 
no desire to build up estates outside its 
boundaries and find itself losing the 
rents and rateable value of the pro- 
perty to another local authority. So 
far local Tory MPs have not Aown 
common cause with their party on the 
council. Hopes for any successful 
amendments to the local government 
bill during the committee stage rest 
with the advocacy of two Birmingham 
Labour MPs, Mr Denis Howell and 
Mr Ray Carter. Birmingham’/ case is 
likely to come up at Westminster next 
week. But the outlook is not too hopeful 
for the city. So far the Government has 
only accepted two amendments to the 
bill in committee. 


Student unions 

A respite, not a 
surrender 

The Government did not suffer a defeat 
this week with its decision to postpone 
any possible change in the pi'esent 
method of financing student unions 
until the 1973-74 academic year. It is 
quite true that no reputable body in 
the education world has expressed so 
much as a good word for last Novem- 
ber’s consultative document. Dons and 
students united in a self-righteous 
alliance to oppose the proposal to trans- 
fer responsibility for the financial 
upkeep of the student unions from the 
local authorities to the higher educa- 
tional establishments* Not even the local 


S15 

authonties, in whose interests the 
change was proposed, have worked up 
much enthusiasm for it. 

As its excuse to defer a decision until 
the end of its consultations in July, 
the Government says that the local 
authorities are too preoccupied with 
local government reorganisation to give 
much of their lime to a change in the 
financing of student unions. But Mrs 
Thatcher’s decision has left the 
National Union of Students uncertain 
about the Government’s intentions, and 
its planned demonstration in London 
on January 123rd is to go ahead along 
with yet another extraordinary NUS 
conference Six days later to discuss the 
issue. 

The student leaders are probably 
right. The Government has no inten- 
tion of merely conceding a perpetuation 
of the present arrangements on student 
union finances. It may well come 
around soon to backing tlic widespread 
call for a registrar to supervise student 
unions. A private member’s bill by Mr 
Gilbert Longden, Tory MP for South 
West Herts, which would create 
such a registrar, has some support on 
the Labour backbenches and it is to be 
given a second reading on February 
25th. The Government claims that some 
of the smaller colleges do see some 
value in a registrar who would act as 
both an overseer of union finances and 
also as an ombudsman to defend indivi- 
dual rights. A model code of conduct 
for student unions would be welcome. 
Dons and students are likely to oppose 
such a suggestion with as much zeal 
as they have so far displayed over the 
consultative document. But they have 
not yet been ready to propose any 
alternatives, although most have now 
accepted the injustice of the present 
method of financing the unions where 
there is taxation without representation. 



Longden : a registrar tor students 


26 


tlHE ECONOMIST JANUMIY I 3 » 1972 



Get EnglishToiirist Board 

money behind your 
tourist develofunent scheme 

to 49% siqipoil for approved pNfec^ 



27 


THE ECONOMIST JANUARY 15 , I 972 

Tourism is a major growth industry- by 
the late 19708 tourist spending is expected 
to reach £2,000 million a year. And these 
tourists are becoming more mobile, more 
demanding, more sophisticated. 

That means exciting opportunities for 
development, particutarly in areas where 
the new tourist potential has not yet been 
recognised. 

To get a new tourist project under way 
needs foresight, creative ideas, drive -and 
hard cash. 

The English Tourist Board has funds 
available to support capita) expenditure on 
tourist projects in the Development Areas 
of England. 

IhMi year pvoject qualify? 

There are only three general conditions: 

1. Your project must be In an English 
Development Area - see map. 

2. Projects must involve capital 
expenditure (i.e. the money must help to 
create a physical asset). 

3. From April 1, 1972, projects will only 
be supported if they have our approval 
before work Is started. 

In addition, projects should : 

- be designed to create employment, 
directly or indirectly; 

- be designed to attract tourists, both 
from the U.K. and abroad; 

- be designed to increase tourist spending ; 

- bo open to the public generally (i.e. not 
restricted to a club or to some particular 
section of the community); 

- need our support. 

Projects relating to tourist accommodation 
will be considered and particular attention 
will be given to; 

- areas in which accommodation is now 
deficient in quantity or quality; 

- smaller hotels and inns of historic interest 
or special character; 

- camping and caravan sites where there 
are plans to improve standards In 
cori.sultation with us. 

The kind of projects wc want to help 

A. Non-Commercial Projects where the 
applicant is unlikely to make a reasonable 
profit and might Incur a loss without ETB 
financial assistance. Also projects where 
conventional profit and loss accounting 
would not apply. 

These may be divided Into: 

Loss Leaders Projects wnich offer 
attractions (of the right quality and at the 
right price) to draw into the region 
substantial numbers of tourists whose 
spending on other facilities, such as hotels 
and restaurants, would amply benefit the 
regional economy. These might include 
museums, art galleries, theatres, wild life 
sanctuaries, historic buildings and sites 
with special character and appeal to tourists, 
and projects to provide accommodation for 
tourists visiting these attractions. 

Example: the ETB has made a grant 
towards rendering secure the exhibition hall 
of an ancient abbey so that valuable art 
collections can now be shown there. 
Amenities Projects not necessarily with 
a high puliing power themselves but likely 
to make a tourist's stay more satisfying or to 
improve the organisation of tourism in the 
region. These would include car parks, 
information services, signposting, 
countryside walks, picnic sifes, parks and 
gardens, sporting facilities. 

B. Pace Setters Here we are seeking 
projects (including accommodation) which 
are essentially looking ahead to the needs of 
tomorrow's tourism. Because they contain a 
pioneering element they may not offer, 
without ETB assistance, an acceptable level 
of profit within a reasonable length of time. 

These projects will be ahead of their 


time in terms of : 

Concept Entirely new ideas where the 
pioneering rfsk is great, especially where a 
certain minimum size prevents a slow 
build up of operations. 

Design Radically new designs for known 
types of tourist attractions or amenities 
where special risk and costs may be 
involved. 

Quality Substantially new standards of 
quality for tourist attractions or amenities 
that already exist In roughly similar form. 
This element of pace setting may occur in 
conjunction with changes In design. 

Example: A grant and loan towards the 
cost of a caravan park near Hadrian's Wall 
for 55 touring caravans, setting new high 
standards in facilities and environment. 
Location Projects involving the risks of 
bringing together a number of attractions 
in a new tourist environment. 

Example: A loanifor the restoration of a 
disused mining railway in the West Country. 
The new railway will give tourists a round 
trip of 9 miles. Four stopping points will 
offer: a restaurant, bar and children's 
playroom; exploration ot several old mines; 
pony rides over the moors; and a walk to a 
reservoir with opportunities for fishing 
and boating. 

C. Tourist Infrastructure Projects seeking 
to create the basic structure upon which 
tourist facilities and services can develop. 
These would, differ from 'amenity' projects 
listed above because of their much greater 
cost and likely longer time scale. 

We have no hard and fast rules on the 
specific types of projects: the categories 
above are only for guid-^nce. We will 
consider every application on its merits, 
paying particular attention to the amount 
of ETB financial assistance sought for the 
project in relation to the contribution It 
seems likely to make to the region's 
prosperity. 

Of special interest are projects that fit in 
with the kinds of tourism a particular 
legion wants -for example extending the 
season, or developing the lesser known 
parts of the region, or attracting tourists 
with special interests. 

Fomi of ETB Financiil Support 

Our support may take the form of a loan, 
a grant, a mixture of both, or in rare cases 
the acquisition of shares. Our phiiosophy is 
to help applicants to help themselves and, in 
line with this philosophy, wherever 
practicable we aim to lend public money 
rather than make outright grants, The type 
of support offered is at our discretion, after 
consultation with the applicant. 

In general, support for projects in 
category A above would tend to be weighted 
in favour of grant. In categories B and C the 
accent would be on seif help and therefore 
on loans, though a small element of grant 
might not be ruled out. 

Commercially sponsored projects will not 
normally qualify for total assistance from 
national or local public funds in excess of 
50 oer cent of the cost of the project, and 
ETB's own participation in any one project 
will not exceed 49 per cent of the cost. 

Interest on loans will be at the 
Government lending rate appropriate to the 
length of the loan. In certain circumstances 
up to three years moratorium on repayments 
may be given. 

Funds will usually be paid when the work 
Is completed, although in some cases it may 
be possible for instalments to be advanced 
subject to satisfactory evidence of 
expenditure. 

Ifawtolipflr 

If you think your tourist project may be 
eligible for support, write to the appropriate 


regional tourist board - see list of 
addresses -for application form TB/IOand 
explanatory booklet. After assessing your 
proposal in relation to local knowledge and 
needs, the regional board will pass it on to 
us, together with its own advice. 

All applications, which will be treated in 
strict confidence, will be finally considered 
at the headquarters of the English Tourist 
Board, whose decision is final. The ultimate 
responsibility for deciding on each 
application rests with the English Tourist 
Board and its staff, and it is from ETB 
headquarters that a detailed marketing and 
financial appraisal of each application may 
be made. 

Rcgnoal Twniit Bnnb in 
DevdnpnMntAKH 

Cumberland, Westmorland and 
Furness Peninsula 

English Lakes Counties Tourist Board, 
Ellerthwaite, Windermere, 

Westmorland, (Windermere 4444) 
Northumberland and Durham 
Northumbria Tourist Board, 

8 Eldon Square, Newcastle-upon-Tyne, 
NE17JO (0632 28795) 

North West 

North West Tourist Association 
Municipal Buildings, Dale Street, 
Liverpool L69 2DH (051 -227 391 1 ) 

South West 

West Country Tourist Board, 

Trinity Court, Southernhay East, 

Exeter EX1 10 s (0392 76351) 

Yorkshire 

Yorkshire Tourist Board, 

312 Tadcaster Road, York Y02 2HF 
(0904 67961) 

English Dmlopmcnt Anas 

Our map shows the Development Areas 
established under the Industrial 
Development Act, 1966. 

Broadly, the English Development Areas 
are: 

Most of the North Riding of Yorkshire 
Northumberland Durham Cumberland 
Westmorland The Furness Peninsula 
Merseyside, including Skelmersdale and 
Winsford 

Most of Cornwall and North Devon 
Your regional tourist board or nearest 
employment exchange can advise you 
whether your project lies in a Development 
Area. 



English 
Tourist Board 





Some people never notice our bridges 


We take it as a kind of compliment. 

Behind us we have maior bridj?es of every 
kind of design; in hand we have some of the 
biggest projects in the world - bridges across 
the Bosporus and Rio Ba> to mention but two. 

It all adds up to an awful lot of people 
happily ignoring us every day. 

It also adds up to a sizeable number of 
people who have noticed us. 

The people - at every level - who make the 
vital decisions on bridge building. 

We like to think our experience and 


expertise have a lot to do with getting noticed 
and getting contracts. After all we’ve been 
bridge building and fabricating structural 
steelwork of every type for over 90 years. 

That adds up, too. To the fact that you can 
rely on Cleveland to help you cross your 
bridges before you come to them. 

CLEVELAND 

The Cleveland Bridge & Engineering Company Limited 
PO Box 27 Darlington, Co. Durham, England 
Telephone: Darlington 65335 



THI BOONOMI8T JANUAKY I5, 197^ 


29 


TH E WO R LD International Report 


Norway under the spotlights 


With unusual ballyhoo, the BBC has 
just launched an elaborate television 
i series about the empire on which the 
sun never set. Today, we are told, 
British influence is not the worldwide 
thing h once was. Yet British actions 
do still seem to send ripples around the 
globe. New Zealand, which was 
prominent in the BBC’s first imperial 
instalment on Tuesday night, captured 
a front-page position in much of the 
world’s press last year in connection 
with Britain’s application to join the 
European Economic Community. In 
jhe same connection, the spotlights 
swung this week to northern Norway 
— where, in summer, the sun never 
sets. From the south Pacific to the 
European Arctic, moves made in 
London by men with their eyes on 
Brussels have had sharp effects. But it 
must be admitted that the British as a 
whole have been slow to work up much 
interest in these far-flung consequences 
of their new European enterprise. .To 
adapt Seeley : we seem, as it were, to 
have capsized half the world in a fit 
of absence of mind. 

In Norway last March Mr Per 
Borten's centre-right coalition broke up 
because the prime minister’s own Centre 
party had turned against the idea of 
joining the conmon market. Mr Try^e 
Bratteli’s Labour party took office, witli 
only 74 of the Storting’s 150 seats but 
wiith the apparent support of the Con- 
servative, Liberal and Christian People’s 
parties for its declared policy of 
pursuing the application for member- 
ship which Mr Borten had initiated in 
1967. In June, however, 37 Storting 
members (die Centre’s 30 , with 8 
Labour, 5 Liberal and 4 Christian 
dissidents) voted against continuing 
the negotiations. As a mere 38 
memben could bl^k Norway’s entry 
into the EEC, which would constitu- 
tionally require the support of three- 


quarters of the Storting, the country 
was left teetering on a knife edge. 

Mr Bratteli’s chances of mustering 
the necessary majority came to turn 
mainly on his ability to secure adequate 
protection for the fishermen who 
provide a tenth of all Noi way’s exports 
against the threat of their inshore 
waters being invaded by other EEC 
members’ fishing fleets. On Sunday he 
ended a brisk tour -'f European capitals 
by visiting Mr Heath and voicing his 
belief that he would get the terms he 
wanted. But on Tuesday his foreign 
minister, Mr Andreas Cappelen, flew 
home after a s&ssion in Brussels that 
had ended in stalemate (see page 73). 

In Brussels, spokesmen indicated that 
the Six could make no further con- 
cessions; m Lemdon, there <Vere signs 
that the Labour party meant to hold 
Mr Rippon to his promise to reject any 
deal that left British fishermen less 
favourably placed than Norwegian 
ones. But it was also appreciated that 
Mr Bratteli and Mr Cappelen, although 
both are oonvinoed pro-marketeers, 
might well be unable to produce a 
Norwegian signature on the present 
terms by the planned date of January 
sand. if on the one hand there 
seemed some danger that a last-minute 
special concession to Norway might 
reopen the British fishermen’s whole 
can of worms, on the odier hand there 
loomed the prospect of an anguished 
Norwegian decision to suspend the 
whole negotiation — ^a decision that 
could lead the Danes to jib too. 

More is involved than the livelihood 
of the small fishing communities of 
northern Norway. If those communities 
were eoctinf^ished, die depopulation of 
a whole region that immediately adjoins 
Russia would pose a new strategic 
problem for the Nato allies as a whole. 
On top of this must be weighed the 
fact t^t (as was bmng admitted, tlus 



Can Brattali clinch it ? 


week, even by those in Brussels who 
were arguing tliat it would be better 
not to try to take the Scandinavian 
applicants into the EEC for the time 
being) an enlaigement of tlie European 
community to eight, by the admission 
only of Britain and Ireland, would 
leave the Nordic countries with a sense 
of rejection, and dishearten many 
people within the community too. 
The western alliance could thus face a 
strong re.surgence of the neutralist 
tendencies that are part of the 
Scandinavian tradition, and perhaps 
also a strengthening of similar 
tendencies in other countries. 

Norway and Denmark, if left out of 
an enlarged community and thus 
separated from Britain, the dominant 
member of the European Free Trade 
Association that has served it and diem 
so wedl, would be less able to get by 
than Sweden on the terms now offered 
by the Six to the Efta survivors. The 
Nordic group might enjoy recap- 
turing the solidarity against the EEC 
which it successfully achieved a few 
years ago during the Kennedy Round 
baigaining, but this would neither 
compensate its members for the breach 
with Britain nor mitigate the 
unpleasantness of the inevitable period 
of recrimination and fresh haggling. 
And the sad thought recurs that these 
unattractive prospects might have been 
averted if a little more timely thought 
had been given to the problems of the 
Scandinavian states, which have suf- 
fered more than most from the Britidi 
hsint of taking old friends too much 
for granted. 





30 


INTERNATIONAL REPORT 


THE ECONOMIST JANUARV I5, I97S 


Malta 

Hey, not so fast 

How much is Malta worth ? That, for 
all the 170 years of friendship between 
Britain and Malta, is what the quarrel 
with Mr Mintoll is about Mr Heath 
says Malta is worth no more than the 
£9.501 a year agreed last Septeml)er. 
Maita^ prime minister, Mr Dorn 
Mintoff, says £i8m a year. Some of 
Britain’s Nato allies, especially the 
United States and Italy, apparently 
think that splitting the difference at 
about £1401 might be a convenient 
way out. 

The worry in Nato is as much that 
Malta should not sell the rights to use 
its base to Russia as that the base 
should remain in Britisli hands. I'his 
has created the wwk's !)ig story, 
of a rift between Britain and some of 
its Nato partners aliout furtiier negotia- 
tions with Mr Mintoff. The reports are 
naturally denied in Whitehall. But on 
Monday Mr Luns, the Nato secretary- 
general, made a sudden visit to Mr 
Health at Chequers. There was an in- 
decisive Nato council meeting on Tues- 
day, and another on Wednesday. 

Mr Heath had another visitor this 
week, Malta’s Archbishop Gonzi, and 
although the archbishop left London 
empty-handed it is fair to suppose that 
he had come to look for a compromise. 
From London Monsignor Gonzi went to 
Rome, Where he .said that he had heard 
other Nato countries might increase 
die British offer by £3m-£4m. No*tes 
continued to lie exchanged between Mr 
Mintoff and the Foreign Office, 
althotigh both sides claimed they were 
more about the technical arrangements 
for British withdrawal than about fresh 
talks. 


By Wednesday afternoon there were 
signs that Mr Mintoff might be getting 
nervous at last. His spokesman in 
Valletta said that he was confident a 
.settlement could be reached with 
Britain over payment for a base on 
Malta. Mr MintofTs director of infor- 
mation went out of his way to claim 
that “all kinds of contacts” were 
going on, and added that there was a 
lot of movement, which is indisputable. 
But he dodged the question of whether 
Mr Mintoff insists on keeping this 
Saturday, January 15th, as the dead- 
line for evacuation. 

Mr Mintoff’s hopes are now clearly 
pinned on the Nato council rather than 
on Britain itself. Mr Heath might be 
hard put to it to object to offers from 
Britain’s Nato partners to make up 
the difference between Mr Heath’s 
£9.501 and Mr Mintoff’s demand. The 
snag as Britain sees it is that if Mr 
Mintoff gets more money he may not 
long rest content with whatever is 
agreed upon in 1972. After all, he has 
the example of his new friend, Colonel 
Qaddafi of Libya, in the fine art of 
demanding more. Next time round Mr 
Mintoff’s weapons could be the same 
mixed bag he has used this time — 
enticements to an unpredictable Libya, 
flirtation with Russia and a faiily 
effective playing on the pro-Nato and 
pro-communist divisions that riddle 
Italian politics whenever a ruling 
coalition in Rome finds itself in a crisis. 

If Britain’s Nato partners do agree 
to top up Mr Heath’s offer, the 
argument will come down to two 
tilings. Can Mr Mintoff be tied down 
to any contractual arrangement he 
signs ? And how far should any deal 
that makes Malta a Nato-financed 
base restrict it from opening its 
facilities to occasional visits by Russian 




Oomts Mies turn out 


ships too ? In the text of its agreement 
wi^ Britain in September Malta 
attached “great importance” to its 
right to make agreements with other 
powers to use the bases on Malta. In 
any further negotiations, Mr Mintoff 
should be asked to spell this out. 



One Monday's 
pursuit of truth 


FROM OUR BONN CORRESPONDENT 

It would be a tall order to record all 
the current manifestations of intoler- 
ance among students and teachers of 
the radical left at west German univer- 
sities. But a look at one day’s goings on 
will give a pretty fair idea of what is 
happening, and why it is summed up 
by some headline writers as a “ revo- 
lution on rubber soles.” 

At the Free University in 'vest Berlin 
last Monday members of ttie commu- 
nist students’ association blocked the 
approach of German and foreign dele- 
gates (some of whom were marxists) to 
the opening of a three-day conference 
on “ authority and crisis ” that had 
been organised by the faculty of politi- 
cal science. According to the ob.struc- 
ters, the purpose of the conference 
(which was put on later under police 
protection in the municipal congress 
iiall) was to make favourable publicity 
for imperialist research into the origins 
of war and conflict, and in so doing to 
” belittle the sources of discontent.” 

In another wing of the Free Univer- 
sity on Monday Professor Jurgen 
Zerche, a political scientist, was 
.shouted down by students of the “ Red 
Gell Economics ” on the ground that 
as a member of the academic senate 
he had not supported their candidate 
for a lectureship, the Belgian commu- 
nist Mr Ernest Mandel. When the 
demonstrators tried to prevent the 
pnrfessor leaving through the door he 
evaded their threats by jumping out 
of a ground-floor window. 

At Marburg university the same day 
a senior jurist, Professor Schlosser, 
made public his reasons for leaving to 
take a chair at Augsburg TTie new 
university laws of the state of Hesse, 
the professor explained, had admitted 
“ totalitarian forces ” into the very 
centre of Marburg university. He saw 
no further chance of being able to do 
any reasonable work there. 

"Through providing for student par- 
ticipation in university govemment- 
the scale of participation varies slightly 
from state to state — the new laws have 
indeed presented some dedicated stu* 



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33 


INTBRNATrONAL REPORT 



dents with an opportunity to extend 
communist influence at the expense of 
less confidently assertive political asso- 
ciations. In the circunistances it is not 
surprising that already scores of 
obifxtions to the laws have been tabled 
at the federal constitutional court in 
Karlsruhe. All invoke section three of 
article five of west Germany’s Basic 
Law, wliich lays down that “art and 
learning, research and teaching, shall 
be free. Freedom of teaching shall not 
absolve from loyalty to the constitu- 
tion.” Though much of it goes 
unspoken in public, there is a growing 
anxiety among a majority of teachers 
and students that freedom of study and 
teaching is in practice jeopardised. 

The new laws were designed to 
bring a bit of fresh air into west 
Germany's rather hierarchical univer- 
sities, and were largely a response to 
the left-wing students' violent protests 
of three and four years ago. They have 
given all politically minded students a 
chance to try their wings at a relatively 
low altitude. Bv communist students 
they are being used in particular to 
correct the pretentious error of those 
stirring days, when they believed they 
were called to lead the workers into 
revolution against capitalist society, 
I'heir long-term marxist aim, of course, 
remains the same. But they have 
changed their tactics. 

As their much-cited mentor, Rudi 
Dutschke, put it when he realised that 
the campaign at the end of the igfios 
had been bungled, the route now must 
be that of the long march through 
the institutions.” The left-wingers are 
shrewdly exploiting every possibility of 
having a say in university appoint- 
ments and curriculums in the expecta- 
tion that it will help in due course to 
place their men in key jobs in govern- 
ment and elsewhere, including the 


vaiiuus media of mass communications, 
throughout the ebuntry. 

'Flirough blustering and often men- 
dacious propaganda, and through 
unflagging participation in university 
election.s, the radical left, although in 
a minority, has already won control of 
the student parliaments in 12 of the 
bigger universities, among them Berlin, 
Hamburg, Munster, Marburg, Heidel- 
berg and Munich. Its representatives 
are consequently in a position to 
negotiate with the teaching and 
administrative staff. They block 
appointments and enforce changes in 
curriculums, if not by purportedly 
democratic procedures then by trickery 
or rowdyism. At Frankfurt, for 
instance, the “ Red Cell Sociology ” 
recently tried to make Professor Baier 
alter the tenor of a course on Lukacs. 
His lccture.s were repeatedly inter- 
rupted by contrived failure of the 
lights and by bringing in barking dogs 
and erlang babies. Ihe professor 
gamely stuck it out. But through the 
students’ council, which is dominated 
by marxists, the red cell has organised 
a rival course on Lukacs. 

There are already moves in Baden- 
Wurttemberg to revise the new laws so 
that academic authority would be 
restored to qualified persons. And all 
parties in the Bundestag are taking a 
liighly critical interest in the projected 
“ university umbrella law ’’ which is 
due for a first reading in the spring. A 
group of Soc'-ial Democrat professors 
at the Free University in Berlin have 
sent a letter to the Social Democrat 
deputies in Bonn warning them of the 
di.sruptive consequences of letting the 
universities develop into “ counter- 
institutions of society ” and of lowering 
traditional scholastic standards. 

“There are places,” the Berlin pro- 
fessors obseive, “ where scientific 


tm EdbNOMSST jAKUAStV I5, 

education has been replaced by one- 
sided political indoctrination. . . . The 
personnel policy of the radical groups 
is a greater threat to our democratic 
society in the long run than are spec- 
tacular acts of violence." 

East Germany 

Harsh words and 
boobytraps 

East Germany is opening its doors to 
the east while keeping those to the 
west as firmly locked as ever. East 
Germans may now travel to Poland 
without a visa and will soon be able 
to do the same to Czechoslovakia. 
Travel to the west is still forbidden to 
the great majority of east Germans. 
Indeed, the fortress designed to keep 
east Cjennans inside the communist 
boundary is being made yet more 
impregnable. To complement the land 
mines which east Germans escaping to 
the west already have to contend with, 
Hen Honecker’s government is now 
testing the efficacy of boobytraps 
placed on the high fences that run 
along stretches of the border in Lower 
Saxony and Schleswig-Holstein. The 
existence of these boobytraps was dis- 
covered last weekend by a young cast 
(ierman couple who stepped on one 
while climbing the border fence. It 
exploded late, when they were already 
safely on west German territory. 

Herr Honecker’s preoccupation 
seems to be to discourage any hopes of 
free movement to the west that might 
have been raised among east Germans 
by Herr Brandt’s Ostpolitik. That 
there can never he any unity between 
the “ socialist ” eastern and the 
“ imperialist ” western halve.s of 
Germany, Herr Honecker said last 
week, is as certain and as clear as 
the fact that rain falls to the ground 
and not up into the sky.” Herr 
Honecker may simply have been 
reassuring all those rattled communist 
officials in east Germany who must 
secretly wonder whether a miracle may 
not be in the offing after all. Their 
uneasiness was apparent in the anger 
of their recent attack on the west 
German minister of the interior, Herr 
Genscher, who had said in an interview 
with Die Welt, the communists’ 
unfavourite west German newspaper, 
that the frontier between east and west 
Germany was a “ demarcation line.” 
Such tetchiness, and those boobytraps, 
do not promise well for the 
“ normalisation ” between the two 
Germanics that Herr Brandt is 
hoping to achieve this year. 



33 


THE ECONOMIST JANUARY I5, I972 

Pakistan 

The race between 
Bhutto and chaos 

FROM OUR SPECIAL CORRESPONDENT 

Rawalpindi 

President Bhutto’s immense political 
skill had gone a long way towards 
preparing Pakistanis for Sheikh 
Mujibur Rahman’s flat rejection on 
Monday of any constitutional links 
with east Bengal, even though the 
harsh terms the sheikh used were a 
shock to them. In the three weeks since 
PaJtistan’s humiliating defeat by India 
Mr Bhutto has carried his people from 
the comforting illusion that the struggle 
for East Pakistan would continue for 
ever to persuading them that the 
matter should depend on the 
wishes of the east Bengalis. By Thurs- 
day it looked as though he would 
administer the final dose of reality 
by asking them to accept Sheikh 
Mujib’s decision. 

Such a step would imply dropping 
the fiction of an eastern wing c 5 
Pakistan and according Bangladesh 
de facto recognition. From there Mr 
Bhutto no doubt hopes that one day 
their common religion and a shared 
fear of Hindu domination will bring 
about a reconciliation between the two 
Moslem states on the subcontinent. 
This could be reflected in a special 
economic relationship, or even in 
joint membership of a body such as 
the Regional Co-operation for Develop- 
ment, which links Pakistan with 
Turkey and Iran. 

The government has already instruc- 
ted the planning commission to revise 
its economic projections on the basis 
of a one-wing Pakistan, But to accept 
the reality of what has happened in 
Bengal has a very uncomfortable side 
for Mr Bhutto. It means that there 
are no further barriers to drawing up 
a constitution and convening the 
assemblies elected at the end of 1970. 
Having tasted the advantages of 
martial law, Mr Bhutto sees that 
absolute power has its virtues in the 
present confusion, especially after the 
rash pledges of social and economic 
reform made by his People’s party in 
the election campaign. He is expected 
by his followers to produce miracles 
overnight. 

For the first time most ordinary 
Pakistanis feel that they have a 
government acting in their interests 
and not in those of their employers. 
They have been gheraoing, or besieg- 
ing, senior executives in their offices 


INTERNATIONAL REPORT 



Man in a hornets'^ nest 


until their demands are met. The 
demands, many of which fall within 
the scope of Mr Bhutto’s election 
promises, range from higher wages and 
special bonuses to a request that there 
should be no further layings off. Some 
workers have included better canteens 
and health schemes in their list of 
requirements. In almost every jail in 
the country prisoners have gone on 
hunger strike or rioted for improved 
conditions or a speedier hearing of 
their cases. The newspapers have 
demanded freedom, and got it ; not 
unexpectedly, they have us^ it to blast 
off criticisms at the government and 
to ask why the national assembly has 
not been convened. 

Mr Bhutto’s problem is that he has 
raised a hornets’ nest of expectations, 
and he has precious few resources to 
meet them with. Since May ist, 
when Pakistan declared a unilateral 
moratorium on its debts, the payment 
of about $ioom — mainly money due 
to the aid consortium — has been 
deferred. For the financial year which 
started on July ist, the government 
had been budgeting for a deficit of 
530m rupees, and by October 31st, 
before the war, that had already been 
tripled. The economy is stagnant and 
the government’s receipts are dropping, 
not least because the fall in imports has 
brought a corresponding decrease in 
customs revenues. Mr Bhutto has taken 
a series of steps in an effort to revive 
the economy and appease the labour 
force while reassuring the business 
conununity, but they are of necessity 
stopgap measures. 

To the world outside the president 
has gone out of his way to present 
himself as a moderate and a man of 
conciliation. He is no longer either the 
smooth diplomat who toured the world 
as President Ayub's foreign minister 


or the rabble-rouser of the 1970 
election. The disaster that has hit 
Pakistan since March has apparently 
made him a more sober and compas- 
sionate man, and there is certainly no 
other figure of comparable stature in 
Pakistan. But he is up against almost 
overwhelming problems. He will need 
vision, and other people’s faith in him, 
if the old unscrupulous and dictatorial 
side of his character is not to emerge 
again. 

The countries that supply aid to 
Pakistan could help him most by 
agreeing to a further moratorium of 
six months or so on foreign debt 
repayments, and by supplying him with 
commodity aid. That would ejnable 
him to get some of the raw materials, 
machinery and spare parts that would 
help to put industry on its feet and 
show his people that he is at least 
providing more jobs. At the moment 
the aid consortium’s rules prevent him 
from obtaining more aid until debt 
repayments begin or the government 
has negotiated a rephasing of them 
in the context of a new economic 
plan. An agi cement on a further 
deferment — rather than a unilateral 
declaration of one by Mr Bhutto — 
would be taken by the business 
community in Pakistan as a token 
of international confidence and would 
be an inducement for businessmen to 
invest. 

It may also be desirable for Mr 
Bhutto to launch an extensive public 
works programme to increase 
employment and put money into 
people’s pockets. The budget deficit is 
already so big that there is not much 
to be lost by making it even larger. 
All this would help to buy him the 
time he needs to tackle the problems 
of cutting down the armed forces, 
which absorb 70 per cent of the budget,- 
and planning the economy again from 
scratch. 

If Mr Bhutto is unable to meet 
popular expectations, the danger is 
that he will resort to all the armoury 
of an authoritarian regime to salvage 
his power. The apparatus is ominously 
available. He already has his mass 
rallies. The scapegoats are to hand : 
ex-president Yahya Khan and his 
military circle, the* “ 22 families,” and 
any other opponent who could be 
conveniently labelled as an Indian 
agent. The ex-president was put under 
house arrest this week, and there is a 
real possibility that he will be brought 
to trial. The price of Mr Bhutto’s 
failure could be a continuing circus 
of mass rallies, denunciations and 
public trials. 


INTERNATIONA t' REPORT 


34 


THE EOONOJilST JANIJARV I^i *9)^ 


Bhodesia 

A rough count 

FROM OUR SPECIAL CORRESPONDENT 

Salisbury 

“ Not impressed ’’ : that was the neatly 
written comment of a white Rhodesian 
in the visitor’s book at Johannesburf? 
art gallery’s Bonnard exhibition, the 
best show to be found in South Africa 
at the moment. The same comment 
was expressed on Tuesday by a black 
Rhodesian on seeing the arrival in his 
country of the Pearce commission. 

l^ord Pearce turned up in Salisbury 
on Tuesday with an assortment of 
former colonial administrators who now 
help to run British organisations as 
varied as a gas board and the London 
Zoo. One of liis four deputy chairmen 
dropped out Iasi week, having suddi‘nly 
discovered a business interest in 
Rhodesia that might have jeopardised 
his objectivity. At a jjress conference on 
Wednesday Lord Pearce himself gave 
the impression that he las not yet 
made up his mind how' iie is to go 
about his task. When asked whether 
the coininission would give equal 
weight to a solitary “ yes ” and to a 
“ yes ” accompanied l)y a reasoned 
argument, he implied that it would. 
When it was then pointed out to him 
that tlie commission’s task would there- 
fore he equivalent to that of a referen- 
dum, he admitted that he had as yet 
no clear idea of liow tlie commission 
will assess the opinion of “ the people 
of Rhodesia as a whole.” 

The commission will begin its work 
in earnest next week. While Lord 
Pearce and his three deputy chairmen 
remain in the Salisbury office that ha'^ 
unofficialK been christened Accept- 
ability House, bis i6 commissioners 
will fan out into the tribal trust lands 
(black areas) when* white men can 
go only with special j^ermits. There is 
a widespread expectation that they will 
find a strong and unequivocal rejection 
of the agreement Sir Alec Doughus- 


Home reached with Mr Smith in 
November ; a black African was shot 
dead on Thursday, and several others 
wounded, in a demonstration partly 
directed against the agreeinen»t. 

It is true that the council of (state- 
paid) chiefs has strongly recommended 
that the proposals be accepted, but all 
the evidence at the moment suggests 
that the chiefs have very limited 
influence. The newly formed African 
Natk)nal Council is making all the 
running. Led by a Metliodist bishop, 
Abel Murorewa, it has been established 
by former members of the banned 
nationalist jjarties, Zanu and Zapu, 
expressly to fight the proposals. The 
popularity it has already won has 
astonished Rhodesia’s whites. 

The ANC complains that the 
government has been obstructing the 
new movement’s campaign. Under the 
einei'gency regulations, its meetings 
cannot be held out of doors ; and 
indoor meetings must, the government 
insists, be held in insured halls. But no 
insurance company has yet been 
willing to give the ANC the necessary' 
cover. On I'hursday the AN(J provided 
the press with evidence, oral and 
written, that the Smith government’s 
policy is preventing “ normal political 
activity ” from taking place. The AN(J 
had made around loo applications for 
meetings in the African rural areas ; 
but not one could be held. 

None the less, the AN(]’s message is 
being conveyed l)y word of mouth 
with great efficacy. The essence of its 
argument against accepting the Smith- 
Home agreement is that the black 
Rliodesians abominate it : that it offers 
them so little improvement on what 
they have already that life would be 
scarcely any better if they accepted 
the terms ; and that far the greater 
benefit goes to the white population. 

The strength of this sentiment is 
already being felt !)y the (Centre party, 
the only multiracial one in Rhodesia, 
which holds seven of the eight elected 
African seals in parliament. Although 


critical of the terms, the white-led 
Centre party favours acceptance of 
them as the lesser of two evils. But so 
great is the support for the ANC that 
the Centre party’s black members — 
who represent its entire strength in 
parliament — feel that their electoral 
following will melt away if they 
advocate what the ANC calls “ a 
rubber stamp to legalise UDL” 

Two very important things have 
been brought about by the deal 
between London and Salisbury. First, 
black Rhodesians are now aware that 
they are entirely on their own. Second, 
a united front representiing Rhodesia’s 
blacks has emerged for the first time 
in the country’s history. 

Israel 

Moshe wins 

FROM OUR ISRAEL CORRESPONDENT 

The compromise over the defence 
budget reached last wet‘k by Mr Pinhas 
Sapir, Israel’s minister of finance, and 
Mr Moshe Dayan, the minister of 
defence?, is on the whole a victory for 
Mr Dayan, For more than two months 
the? two men have stuck to their 
arguments : Mr Sapir has been 
demanding substantial cuts in the 
budget for 1972-7;^, starting with 
defence ; Mr Dayan has been insi.sting 
that any cut would jeopardise the con- 
tinued strengthening of Israel's defence. 
Since defence accounts for about a 
third of the whole budget, Mr Sapir 
argued that there was no point in his 
starting the bargaining with other 
ministers until this issue was settled. 

Now that defence is out of the wav, 
Mr Sapir hopes to submit his draft 
to the cabinet next week and have it 
tabled in tlie Knesset before the end 
of Fefuuary. First, though, he must 
.sla.sh £200111 from the ministers’ pro- 
posals in order to bring the total down 
to around £1,625111. Fhe defence bud- 
get deal, satisfactory- on the surface 
to the mini.stcr of finance, will allow 
Mr Dayan about £530111 instead of 
the £6oom he had last year. 

The compromise, however, is unlikeK 
to inflict any cruel hardships on the 
defence minister. 1'he deal contains 
various small-print clauses : there 
an extra £iom which Mr Dayan has 
said he will try not to use, and a further 
£35111 wliich can be spent this year 
but will appear on next year s figures. 
Also, should any sudden need.s arise, 
the budget will be enlarged 
accordingly. 

Since Mr Dayan came in from the 
political cold on the eve uf the 1967 



But oan you explain it yourself. Lord Pearce ? 


'the BCbNOlilSt jahoaEy 15, 197a 


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THE ECONOMIST JANUARY 1 5 , 1972 


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37 


war, his power has been steadily ascend, 
ing. Hb position on the budget was 
further enhanced by the revival of 
guerrilla activity in the north— and 
Israel’s counter.raids on Tuesday 
against two Psdestinian bases in 
Lebanon-^nd even more by America’s 
consent at last to renew delivery of 
the costly Hiantoms. Reports that 
Israel is to receive 40 Phantoms and 
80 Skyhawks are substantially true. But 
the horsetrading over the rate and 
dates of supply and Israel’s political 
concessions in return is still to come, 
and could be tough going. 

The United States and Israel have 
never agreed about the effect of 
renewing • Phantom deliyeries : the 
State Department argues that they 
could cause fighting to break out 
again ; Israel argues that they would 
act as a deterrent. The two govern- 
ments now seem to have agreed to 
disagree, but to the benefit of Israel. 
All the same, the United States still 
hopes that in return Israel will show 
a more flexible attitude, particularly 
towards the American proposals for 
reopening the Suez canal. There were 
reports that Mrs Meir, on her last 
visit to Washington, was more amen- 
able than she had been before, though 
not al)Out any specific details. It is 
thought that her offer to send Mr 
Payan to Washington next month was 
welcomed by the Americans, who are 
believed to regard him as the most 
flexible of Israel’s leaders on the 
question of a canal deal. 


Egypt 

Indignation 

FROM OUR CAIRO CORRESPONDENT 


A leading Egyptian politician, whose 
loyalty to the government had not 
previously concealed his scepticism 
about Egypt’s ability to recover its lost 
territory by force, summed up the 
Middle East situation this week : 
“Now you can be sure that the battle 
will start this year.” He was referring 
to the lacerating effect on President 
Sadat of America’s decision to deliver, 
some time, those Phantoms to Isiael. 
Mr Sadat, who for more than a year 
has staked his policy on the American 
prqsosals for an interim solution, is 
believed to regard the decision as an 
affront and a betrayal. 

Thd first leakages of the -decision to 
let Israel have the Phantoms came on 
December 31st, the end of Mr Sadat’s 
year of decision, just after he had 
explained, in his own rather cryptic 
way, dtat ha yvas leaving the door 



open for a political settlement. If, as 
American diplomats say, the Adminis- 
tration’s aim was to break the nbws 
gently, the timing was grossly inept. 
The subsequent announcement that 
Mr Donald Bergus, whose sincerity 
and . understanding of the Arab case 
are generally appreciated, was to be 
replaced as America’s chief represen- 
tative in Cairo by a man who is no 
Middle East expert, and not, as pre- 
viously supposed, by the head of the 
State Department’s Egyptian desk, 
rubbed salt into ^he wounds. 

Egyptians dismiss the idea that the 
Phantom decision was aimed at getting 
concessions from Israel for peace talks. 
They believe it could have been a hint 
to Moscow that Washington would not 
allow a repetition in the Middle East 
of India’s invasion of East Pakistan. It 
has been suggested, too, that the 
Americans wanted to warn President 
Sadat not to take seriously his own 
public statements — ^that Egypt had no 
alternative but war. 

If this was indeed the aim, the 
Americans have miscalculated. Presi- 
dent Sadat knows that Egypt is not 
ready for a decisive battle with Israel. 
His problem has been to maintain his 
credibility with Egyptians and other 
.Arabs while he postpones the fighting 
and continues to look for a political 
settlement. The Phantom decision has 
strengthened Egypt’s hawks, who pre- 
.sent it as further justification for their 
belief that it is a waste of time to seek 
a peaceful agreement. There is evi- 
dence that die new situation has, at 
least temporarily, galvanised Egyptian 
efforts to prepare for battle. 

There are reports that, despite the 
failure of the latest Arab foreign minis- 
ters’ meeting to agree on a common 
financial and military plan, Libya and 
other Arab states have committed 
themselves to financing Egyptian pur- 
chases of the strike weapons which the 
Russians have so far withheld. The 
Arabs may be being unrealistic in 
hojring to get arms from countries 


other than the Soviet Union. But there 
is undoubtedly a resurgence in Cairo 
of the feeling that Egypt will have to 
fight again— soon. 

Arab communists 

Alive and well and 
doing nothing 

FROM OUR LEVANT CORRESPONDENT 

At the concluding session of the third 
general congress of the Lebanese 
Communist party, held last weekend 
in Beirut, the second-ran|cing official 
in the party was sufficierjitly carried 
away by the euphoria of the occasion 
to appear with a white carnation 
in his buttonhole. This particular 
flower is the horticultural emblem of 
the present, bourgeois, prime minister 
of Lebanon. At one level there was 
every reason for euphoria. Here was 
the Lebanese party, after 45 years of 
clandestine existence, operating in the 
open and playing host to the largest- 
ever gathering of Arab communists. 
The conference, attended by around 
50 delegations, both communist and 
“ progressive,^' was held in one of 
Beirut’s more opulent hotels and the 
hospitality was lavish. 

Casting their glance farther afield, 
the organisers had some cause for 
communist self-congratulation. There 
are two communist ministers in the 
Syrian cabinet and a deputy minister in 
the Egyptian government. In Iraq the 
Communist party will be one of the 
three constituents in a national pact. 
The communique at the end of the 
congress announced that 24 Arab 
communi.st and progressive parties had 
agreed to meet again in Beirut to form 
an all-embracing popular front that 
would bestraddle the Arab world. 

Yet at another, and perhaps deeper, 
level the Arab communist movement 
has less reason to feel pleased with 
itself. The popular front tactic has 
found the Arab communists being 
exploited ; they give more to their non- 
communist partners than they receive. 
Beirut, for instance, was the only Arab 
capital, with the possible exception of 
Aden, where such a gathering would 
have been tolerated. The delegates 
from several Arab countries, including 
Egypt, were tamed leftists rather than 
genuine communists. 

Arabs in general continue to regard 
the communist movement with dubiety. 
Communists have to grapple with 
Islamic devoutness and the individual 
vagaries of Arab character. There are 
other more specific objections. The 


■ 

38 INTEHNATIONAL REPORT 


Arabs do not want to be forced into 
taking sides in the Chinese-Soviet dis- 
pute, although the Beirut conference 
felt obliged to condemn China — all 
Arab communist leaders are Brezh- 
nevists. Such gains as the Arab 
communists have made are, at least in 
part, the result of Russia's support, 
military and economic, for several 
Arab governments. But Russia and its 
local followers are not so much anti- 
Israel as aati-zionist and favour a 
peaceful solution of the Arab-Lsraeli 
conflict. Arabs may resignedly accept 
the necessity of a political solution, but 
this does not make them enthusiastic 
supporters of the Russian line. 

3 ^ 

My friend, Nixon 

FROM OUR TOKYO CORRESPONDENT 

The meeting between President Nixon 
and Japan's prime minister, Mr Eisaku 
Sato, at San Clemente on January 6th 
and 7th produced two important 
deci.sions. First, the Americans will 
return Okinawa to Japan six weeks 
earlier than expected, on May 15th, 
Second, the size of the American bases 
on Okinawa will be cut : Japanese 
ofHcials have described how the two 
leaders, craning together over a map, 
agreed that the bases were too heavily 
concentrated in the most crowded parts 
of the island. A further controversial 
issue was laid low by the Japanese 
foreign minister, Mr Fukuda, who told 
a press conference in California that 
Mr Nixon had prorni.sed that there 
would be no nuclear arms in Okinawa 



A sa^il^SS^aio ? 


after its reversion to Japan. 

In a joint statement after -their 
meeting the two leaders recalled that 
their countries had been associated for 
more than 100 years and that 
this relationship had to be based on 
mutual trust and interdependence. It 
did not matter, in the San Clemente 
mood, ithat 'the 100 yeaais have not 
always been full of mutual trust : both 
sides were anxious to be seen to love 
one another. Mr Nixon was 
strengthening the American-Japanese 
alliance before he takes off for Peking. 
Mr Sato, who is expected to retire this 
summer after the return of Okinawa, 
wisJies to take his hanamichi, the 
traditional graceful exit from the 
kabuki stage. 

China was scarcely mentioned in the 
joint statement, although Mr Sato was 
at pains to imply during the press 
conferences he gave after the meeting 
that Mr Nixon’s trip to Peking' had 
been freely discussed. A more 
frank assessment of Japanese fears 
al)Out what Mr Nixon may be getting 
up to was provided on Monday by 
Japan’s ambassador to Wa.shington, Mr 
Ushiba. He gave warning that the 
President’s visit to China might 
“ unintentionally ” be “ the beginning 
of a process of unravelling our mutual 
security in the Far East.” 

China 

What a way to go 

It was an unprecedented occasion — a 
funeral for a man who has been vir- 
tually an unperson for more than three 
years, attended by practically every 
unpurged leader in Peking. Even Mao 
Tse-tung, who is hardly ever seen in 
winter, ventured into the January cold 
to pay his last respects to Chen Yi. 

The funeral cleared up one mystery : 
the reason China has had no new 
foreign minister but only an acting one 
since Chen lost the job in 1968 
is that Chen retained the title to the 
end. Chou En-lai’s eulogy implied that 
his absence from public view all this 
time was due to the cancer that finally 
killed him. Bui Chen’s demotion from 
the politburo — ^which includes three 
ailing octogenarians — is one clear sign 
that his illness was also political. 

As foreign minister since 1958 Chen 
had the reputation for being a 
moderate pragmatist like his predeces- 
sor in the job, Chou En-lai. During 
the cultural revolution he revealed him- 
self to be a highly courageous man as 
well. In Red Guard documents he 


THE ECONOMIST JANUARY 15^ 1972 

stands out as the only top leader who 
told the young radicals exactly what 
he thought of them and their 
hooliganism. 

The turnout for Chen’s funeral was 
a demonstration of how much China’s 
political climate has changed since the 
cultural revolution. It also showed 
how much the politburo has been 
purged since k was chosen in 1969. 
Only six out of the 21 full members 
attended ; another three, including 
<two of ithe ootogenarians, were men- 
tioned as donors of wreaths. There was 
a strong military representation since 
•Chen was a civil war hero and held 
several military offices. But eight 
militaiy members of the politburo, 
including Lin Piao and his wife, were 
absent — the latest confirmation of the 
suspicion that they have all dis- 
appeared. 

There was one altogether unexpected 
absentee : the sixth-ranking man in the 
rump politburo, Yao Wen-yuan. Yao, 
who has always been identified as an 
arch-radical, has recently been revealed 
to have made an extraordinary political 
volte-face. When his former boss, the 
head of the cultural revolution group, 
Chen Po-ta, was purged in September, 
1970, it was Yao who led the attack. 
Vao is thought to have enjoyed a 
special immunity as a relative of 
Mao’s — the alleged husband of Mao’s 
alleged niece Wang Hai-jung. I’his 
young woman, who was one of China’s 
first team at the United Nations, had 
been seen to have privileged access 
to the discussions in Peking with Mr 
Kissinger’s delegation. If Yao has 
indeed fallen, then the cutting edge 
of the purge has come closer than 
eve) to Mao himself. 

Indian Ocean 

A vacuum that's 
filling up fast 

The Americans may have rescued Mr 
Heath from his problem about selling 
arms to South Africa. The American 
aircraft-carrier Enterprise and its seven 
attendaiR ships, which sailed into the 
Indian Ocean during the India- 
Pakistan war last month, rejoined the 
Seventh Fleet in the Pacific this week. 
But on January 7th it was announced 
that the ^ Enterprise had gained 
“ openati-ng experience ” in the Indian 
Ocean and that there would be fre- 
quent patrols of the same sort in the 
future. The Seventh Fleet already had 
a thin slice of the eastern pai t of the 



THE ECONOMIST JANVARV 15, 


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INTBRNAT«ONAL REPOItt 


THE :$COj^OMlfaT 


Indian Ocean as part of its thcoretiv^l 
donva'in. But last summer, it is said, 
it was decided to extend its responsi- 
bilities from the start of 1972 up to a 
line drawn due south from the western 
border of Pakistan. 

For a long time the United States 
has iiad three warships operating out 
of the British base in Bahrain in the 
Gulf; and now that Bahrain is inde- 
pendent the Americans have nego- 
tiated a new agreement to allow them 
to 'Stay on. 'Fhe Americans have already 
leased from Britain the tiny atoll of 
Diego Ciarcia, plumb in the middle of 
this vast ocean, and are busy building 
a commuiiication:^ centre and airstrip 
which are due to be finished late next 
year. The difference from now 
on is that the Seventh Fleet will pre- 
sumably send some of its ships into 
the Indian Ocean whenever it feels 
that the gap between the size of the 
Russian fleet there and that of the 
western navies is getting dangerous. 

^ According to American intelligence 
sources, the Russians now have some* 
15 combat and support ships in the 
area, and an unknown number of 
submarines, against the five or six 
British frigates which are based in 
Singapore along with one Australian 
and one New Zealand frigate and an 
Australian submarine. 

Australia is building a fairly sub- 
stantial base at C'oekburn Sound on 
its west coast, which will be com- 
pleted by 1975. There are also several 
airfields in western Australia that mari- 
time reconnaissance planes can operate 
from. So eventually Australia will be 
able to make a sizeable contribution to 
the defence oi the area even if Mr 
Gough Whitlam’s Labor paity does 
win this years election and fulfil its 
promise to withdraw the Australian 
share of the force in Singapore. But 
in the shorter run u is the new Ameri- 
can contribution that will cancel out 
the Russians’ advantage. 

With the Seventh Fleet coming in 
to reinforce the British sc]uadron at 
Singapore, the Russians will no longer 
have local naval superiority unless they 
greatly expand their presence in the 
Indian Ocean. This makes it less 
necessary for the British to rely on the 
co-operation of the tinj and increas- 
ingly ancient South African navy. 
Anyway, in December South Africa 
placed orders for the hulls of six cor- 
vettes to be built in Portugal ; that 
will keep the South African navy going 
for some year.^. But the unpalatable fact 
is that the weakness of the British — 
and the other Europeans~has made 


it necessary for the United States to 
redress the balance of power in the 
Indian Ocean at a lime when most 
Americans want to limit their com- 
mitments abroad, not expand them. 

Chile 

Sidestepping 

Chile’s President Salvador Allende 
neatly sidestepped congress last week 
in the style to which his country has 
become accustomed. On Christmas 
eve, the opposition Christian Demo- 
cratic party launched a censure motion 
against the minister of the interior, Sr 
Jose 1 oha, on the ground that he had 
failed to curb left-wing extremists who 
have organised paramilitary brigades. 
The motion w'on a convincing majority 
in the chamber of deputies and would 
certainly have been confirmed by the 
senate, forcing Dr Allende to sack Sr 
Foha. But, anticipating a hostile vote, 
Dr Allende persuaded Sr Toha to .swap 
portfolios with the minister of defence, 
Sr Alejandro Rios. 

He kept a minister, but once again 
his vulnerability in the face of a 
parliament dominated by his political 
opponents was on display. Some opposi- 
tion leaders doubted the wisdom of 
tackling Sr Toha, since he has gener- 
ally been I'egarded as one of the more 
reasonable men in the ruling Popular 
Unity coalition. On the other hand, 
he is very close to the president — both 
of them, together with General 
Pinochet, one of the military men 
close to Dr Allende, are said to be 
Freemasons — and his impeachment 
would have been a major personal 
setback for Dr Allende. 

The latest skirmish with congress, on 
top of the opposition’s attack on the 
1972 budget, will make Dr Allende 
more eager than ever to press foiward 
with his plans for a referendum on 
changes in the constitution. He has 
watered down his original proposals 
for a one-chamber people's assembly 
in place, of the existing parliament, but 
the new plan still alarms the opposition. 
The timing of the referendum will 
doubtless he conditioned by the results 
of the hy-elections due to he held on 
Saturday. The Christian Democrats 
and the Nationalists have at last 
achieved a tactical alliance. They are 
fielding Sr Rafael Moreno, a leading 
Christian Democrat, for a vacant 
senate seat, and a Nationalist, Sr 
Sergio Diez, as prospective deputy for 
Linares. But I(x:al rifts in both 
parties have not helped their electoral 
campaign. 


Ghana 

The cocoa coup 

Ghana’s foreign minister, Mr Oferi- 
Atta, used to boast that his country 
was the only one in black Africa that 
had changed its government by the 
ballot box. Now it looks as if Ghana 
has reverted to the general pattern. On 
Thursday morning the citizens of 
Accra turned on their radio to hear 
Lieutenant-Colonel Mike Achampong 
announce, between blasts of martial 
music, the overthrow of the prime 
minister, Dr Kofi Busia. 

The colonel charged the govern- 
ment with corruption, economic inis- 
rnanagement and arbitrary treatment of 
its military opponents. He declared that 
a “ National Redemption Council " 
composed of senior soldiers and opposi- 
tion leaders would be ^ct up. It 
remains to be seen whether he can 
enlist the support of Mr Erasmus 
Madjitey and Mr Joe Appiah, the 
opposition leaders who were calling for 
Dr Busia's resignation after he devalued 
the Ghanaian cedi by more than 40 per 
cent at the end of last month. 

Like Nkruniah in 1966, Dr Busia was 
conveniently out of tiie country ; he 
had flown to London for medical treat- 
ment. There is no doubt that Ghana's 
economic crisis had made his govern- 
ment increasingly unpopular, and the 
series of austerity budgets issued by the 
finance minister, Mr Joe Mensah, 
damped down local investment and 
froze salaries. Although the cost of 
living went up by at least 14 per cent 
in the course of 1971, the wages of 
civil servants and most urban workers 
remained virtually static. In the face 
of a ri.sing tide of union discontent. Dr 
Busia suj^pressed the trade union con- 
gress. But the factor that probably 
counted for most is that since indepen- 
dence Ghana has remained a hostage to 
the world cocoa price. Declining pro- 
duction and a slump in the market 
price amounting to 50 per cent last 
year opened a yawning trade deficit. 

Beside.s becoming the scapegoat for 
his country's economic ills. Dr Busia 
was accused of concentrating too much 
power in his own hands and of being 
much too eager to pursue a policy of 
“ dialogue ” with South Africa. This 
quiet intellectual was as much opposed 
to Nkrumah, the country’s ex-dictator, 
by policy as by temperament. Now he 
has gone the same way as Nkrumah. 
But it is doubtful whether his successors 
will find quick solutions to the prob- 
lems that helped to destroy both of 
them. 



THE ECONOMIST JANVANY I5, 1 973 


4 * 


THEWORLD 


American Survey 


Do-it-yourself diplomacy 


Washington, DC 


President Nixon consultjs friendly 
governments and he can prove it : has 
he not just met, in rapid succession, 
Mr Trudeau, M. Pompidou, Mr 
Heath, Herr Brandt and Mr Sato ? No 
man consults more visibly than he. But 
when an unknown, presumably angry, 
official gave the secret minutes of a 
series of the Administration’s policy 
meetings to the columnist Mr Jack 
Anderson (successor as diief press 
muckraker to the late Drew Pearson), 
the veil was abruptly lifted on a quite 
different way of proceeding. 

The minutes, which Mr Anderson 
in turn released verbatim to the news- 
papers, show the Washington Special 
Action Group at work on the Indo- 
Pakistani war on December 3rd, 4th 
and 6th. The group brings together the 
security and foreign policy agencies of 
government on an ad hoc basis for the 
day-to-day management of ur^nt 
situations. Dr Henry Kissinger presides 
as President Nixon’s assistant for 
national securiu affairs. It was at the 
second meeting, on Deceihber 4th, that 
the group decided that tlie United 
States would request an urgent meeting 
of the United Nations Security Coun- 
cil. “ We want a re^solution,” said Dr 
Kissinger, “which will be introduced 
with a speech by Ambassador Bush.” 
One of the men there was Mr De 
Palma, head of the bureau of the 
State Department which handles 
United Nations affairs, and he wanted 
to know “whether we wanted to get 
others lined up with our resolution 
before we introduced it.” He was told 
that that did not matter,- the thing to 
do was to make the speech and l^e 
the resolution. 

So it turned out that, while the 
American resolution was actually 
defeated by a Russian veto, it did not 
even command a majority of the 
penuanent members of the Security 


Coimcil : the British and French 
abstained. In justification of Dr Kis- 
singer it should be explained that he 
did not for a moment expect the reso- 
lution to be passed or the United 
Nations to do much to stop the war. 
He saw that Ea^t Pakistan was going 
to l>e over-^run by the Indians : 
“ everyone knows how aJl this will 
come out.” 

What he wanted was that the 
American position should be made 
clear and that it should not be an 
even-handed f>osition but should 
favour Pakistan against India. He had 
already caused changes to be made in 
the speech for the ambassador at the 
United Nations Mr Bu. 4 i, because the 
first draft was too even-hand^. 

The State Department was still 
struggling to sound even-handed and 
Dr Kissinger made it very plain that 
its efforts tried his patience, and the 
President’s, severely. The group met on 
December 4th at ii am. At noon a 
noticeably uneasy State Department 
spokesman tdd the piress of the deci- 
sion to call the Security Council and 
was careful not to appear to favour 
one side or the other : what was 
wanted, the spokesman said, was an 
early meeting and an end to the war. 
It can be inferred beyond reasonable 
doubt that the report of this briefing 
tried Dr Kissinger’s patience even 
further, since at 2.30 Mr Sisco, the 
Assistant Secretary of State for Near 
East and South A^ian Affairs, called 
the reporters in again to tell them, for 
quotation, that “ Indiia beairs the major 
ressponsibility for the broader hostilities 
which have ensued.” 

At die United Nations m New York 
the American delegation work^ 
vaJiantly to marshal a majority for its 
resolution, but Dr Kissinger regarded 
its activity with frank unconcern. For 
what purpose, then, was the American 



position to be made clear, as he insisted 
it must be ? One theory is that it was 
teing made clear to die Chinese, who 
also favoured Pakistan, so that no 
hitch might occur in the preparations 
for President Nixon’s visit to Peking 
next month. Another is that die signsd 
was meant for the Russians so that 
they would discourage India from 
conquering West Pakistan too. The 
idea that India had intended to do this 
and had been dissuaded by the Rus- 
sians under American pressure was, 
indeed, circulated from the White 
House in the following week. 

Even if there may be an dement of 
truth in either theory or in both, the 
most likely person for whose bdiefit 
the American position was to be marie 
clear remains President Nixon. Tlie 
President, as Dr Kissinger said at one 
point, “does not believe that we are 
carrying out his wishes ” ; that is, the 
bureaucracy had its own ideas of how 
American policy should look and could 
not be made to understand that the 
President was master. 

Distru.st of “ the bureaucracy ” 
breathed through Dr Kissinger’s con- 
duct of the meetings and evidentiy it 
was coming from the President, who 
was in Florida but was sodding Dr 



42 

Kissinger regularly on the telephone. 
If the object of this exercise in diplo- 
macy was indeed to reassure President 
Nixon that his machine of government 
could be made responsive to bis will, 
it appears at Uie moment to have mis- 
fired. Unauthorised publication is a 
familiar weapon in the struggles of 
advisers to get their own w^y. Presi- 
dent Johnson used to rage mightily 
against it and at one time ordered the 
telephone calls of his staff monitored. 
But what has been leaked to Mr 
Anderson this time is not just the 
substance of the proceedings but a 
verbatim text of the Defence Depart- 
ment's minutes of che meeting. It is not 
the general line of policy but the 
language used that is news. Along with 
the minutes was leaked a telegram of 
expostulation to Washington from the 
American ambassador in Delhi, Mr 
Kenneth Keating, a former Republican 
Senator, the burden of wliich was that 
tlie Nixon Administration had been 
telling too many lies alx>ut India and 
Pakistan. 

It all looks unlike a a attempt to 
influence policy and very like an act 
of retaliation or else a plain expression 
of outrage at the way government 
business is being done. 7 'hc usual 
investigation is going on, with the usual 
lack of confidence of success. While 
tlie minutes were prepared in the 
Defence Department, their distribution 
includes several otlicr departments and 
it is not obvious where the Federal 
Bureau of Investigation has to look. 

Plenty of people in the defence, 
diplomatic and intelligence establish- 
ments have some reason to feel either 
that things are being done wrong or 
that their own ])reiogative.s have lieen 
usurped l)y Dr Kissinger or some other 
White House power or, more usually, 
both. Mr Anderson, for his pait, 
declares that serret government papers 
are offered to him regularly and, if the 
Justice Department tries to investigate 
him, he will investigate it. 

President Nixon must now feel diat 
his suspicions of the bureaucracy have 
been confirmed. When he took office 
after eight years of Democratic rule 
and with a Democratic Congress still 
in being to see tliat Democratic legis- 
lation was, by and large, preserved in 
force, he knew that getting full con- 
trol of the machine of government 
would be a strenuous business. But that 
was three years ago. That he should 
still feel that the regular government 
servants in die foreign policy field, who 
are supposed to be his agents, are out- 
side his control is a grave matter. 

The explanation is not obvious. 
There are Democrats with experience 


AMERfCAK SURVEY 

in the White House, people not pre- 
disposed to sympathise with the 
Repul)lican Pre.sident, who yet think of 
“ the bureaucracy " (they use the word 
in the same hostile way as Dr Kissinger 
was using it in those meetings) as a 
proud, self-contained, unbending, insti- 
tutional power. Tliis is a common 
stereotyped view not only of the State 
Department and the foreign service, 
but also of the service departments and 
the Joint Chiefs of Staff. It is one 
explanation. The other explanation is 
that President Nixon has not gone 
about controlling the machinery in the 
right way. 

Mr Nixon’s practice has been to 
mark off certain areas of foreign policy 
for the special attention of himself and 
Dr Kissinger — areas which they regard 
as central to global strategic policy : 
the Soviet Union, the North Atlantic 
Treaty Organisation, the talks on 
limiting strategic arms, China and, for 
overpowering domestic reasons, the 
war in Indochina. These are handled 
privately and to a large extent person- 
ally, Tlie officials outside the White 
House are left to see to other matters. 

Where the system breaks down is 
that these matters that are treated as 
marginal so often turn out to have a 
bearing on die “ central ” questions . 
it may be relations with Japan or 
foreign economic policy or, in diis 
case, India and Pakistan. For a while 
it was the Middle East. Suddenly, the 
discovery is made that a subject is too 
sensitive to be left to the experts. A 
conflict of wills ensues, of the kind 
that the Anderson minutes have briefly 
and vividly revealed. 

The fact that, on this particular 
matter of India and Pakistan, Mr 
Nixon was probably wrong and the 
professionahs right may be a relatively 
minor point, since there was not a 
great deal that the United States could 
do to influence events in any direc- 
tion. But the episode does illustrate the 
drawbacks of Mr Nixon’s chosen 
method cf managing the areas of 
foreign policy that matter to him 
through a White House staff under a 
brilliant man, Dr Kissinger, without 
regard to the routine work of his State 
Department and foreign service. This 
is the professional organisation created 
to communicate with foreign govern- 
nienis both when their affairs arc 
intere.sting and when they are not. 
When it is bypassed there can be great 
political kudos to be won, but there is 
also usually a penalty to pay. Presi- 
dent Nixon cannot really do without 
his diplomatic machine, but appa- 
rently, after three years in office, he 
has yet to learn to use it effectively. 


THE ECONOMIST JANUARY. *5, 


Democrats against Nixon ; / 

ELECTION 72 

Moderate Muskie 



Washington. DC 


People who think of Senator Muskie 
as a plodder, slow and over-cautious, 
have had some surprises since he 
formally declared himself a candidate 
for the presidency on January 4th. 
When he filed his primary election 
papers in person in New Hampshire, 
he said that President Nixon, who had 
just authorised development of the 
space shuttle, was giving the project a 
higher priority than it deserved. On 
Friday he was in Florida, where space 
is a major industry, scornfully calling 
the decision “ pork-barrel politics.” 

Opposing the space shuttle is no 
way to pick up votes in Florida, but 
Mr Muskie was thinking ahead to 
when he might be President. He 
decided to refuse at the start to saddle 
himself with expensive promises which 
he would then regret. Having made 
this plain, he went on to face a black 
audience in Miami and deal with the 
inevitable question : why had he said 
that the country would not vote for a 
black Vice President ? Though long 
weary of the question, this time he 
was fiery and vehement and, in his 
anger, he won the meeting round : 
suddenly an intensely alive Muskie was 
on the television screens. 

Senator Hubert Humphrey, who 
announced his own candidacy in Phila- 
delphia this week, made a national 
figure out of Senator Muskie in 1968 
by choosing him as the Democrats’ 
vice-presidential candidate. But, the 
election over, Mr Muskie found little 
encouragement for his ambition to seek 
the presidency until the accident at 
Chappaquiddick in July, 1969, seemed 
to eliminate the most popular 
Democrat, Senator Edward Kennedy. 


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44 

Senator Muskie has been out in 
front since then^ but doubts have con* 
tinned to attend the man and his 
chances. It is not so much that he is 
shaggy and looks like a Saint, Bernard, 
nor that he is a Roman Catholic and 
the son of a Polish immigrant tailor. 
His age, 57, is reasonably all right. 
But he comes from a secluded state, 
Maine, with only four votes in the 
electoral college and barely a million 
inhabitants — and most of those 
Republicans. Thus he has no battalions 
of his own. His career — the navy, the 
law, the state legislature, the governor- 
ship, the United States Senate — ^was 
routine (except for his uncanny ability 
as a Democrat to get elected in a 
Republican state) until Mr Humphrey 
picked him. At slix foot four inches Mr 
Muskie can at least be seen without 
difficulty, wherever he is. But he is not 
even rich. Although he genuinely wants 
the presidency he often finds the drud- 
gery uncongenial and the inesaapable 
fund-raising activities demeaning. He 
lets such feelings ^low — a costly indulg- 
ence especially if it hapx)ens on tele- 
vision, on whidh he can be excellent 
when engrossed in his subject. 

On his side is the fact that honest 
men find it difficult not to trust him. 
In the changeable attitudes of the 
American public to its political leaders, 
the feeling of being bamboozled or 
taken in is a fairly constant element. 
This produces a .search for “ sincerity ” 
in politicians. The thing about Mr 
Muskie is that he is manifestly genuine. 
His personal style is no act of policy 
but expresses what he is. There is a 
possibility that this fact, if one may 
call it that, may weigh heavily in the 
November election. Mr Nixon, who 
would be Mr Muskie’s opponent at that 
stage, is constantly discussed as a man 
whose style and external personality 
are assumed out of political calcula- 
tion. Mr Mu.skie gives ptfople the 
feeling that they know what he is. 

As a maker of policies Senator 
Muskie is no great innovator but an 
instinctively moderate, practical politi- 
cian. A latecomer to the Senate 
Foreign Relations Committee, he made 
little attempt to make his mark on 
foreign policy before 1968. Thus it 
was natural at the time that he should 
support President Johnson's policy in 
Vietnam in spite of misgivings that 
were perhap.s not very strongly held. 
Now he .*!ays the war was a mistake 
and must be wound up quickly. 

The legislative field in which he has 
made his mark is pollution control. 
The laws on air pollution and water 
pollution are now stronger than they 


AMBIUCaK stmvBY 

would have been without his thorough 
and persistent work. Yet it is typical 
that he has always shown himself well 
aware of the large economic interests 
that such legislation affects. To the 
general surprise, one of Mr Ralph 
Nader’s groups attacked him in 1970 
in a report, “ Vanishing Air,” for 
failing to give “ leadership.” Just or 
unjust, the attack showed some percep- 
tion of Mr Muskie’s character, for the 
attackers are young men who want 
issue.s dramatised, harshly exposed and 
presented as high conflicts of principle. 
This is what Mr Muskie refuses to do. 
He is a middle grounder, a moderate 
by instinct, a man who can see con- 
flicting interests as equally legitimate 
and to whom reconciling opposites is 
a natural habit. 


Steel manoeuvres 

Price control is becoming more flexible. 
The Price Commission reports that 33 
of the country’s largest corporations 
have agreed to raise their prices, on 
average, by no more than 2 per cent 
during the coming year ; in return, 
they may raise prices by more than 
this for goods for which demand is 
strong (or where competition is weak). 
Another great attraction of the 
scheme (to the commission as well as 
to business) is that these Arms will have 
to submit only one price application 
each year. Shopkeepers will also be 
freer now that the commission has 
decided that they need not keep track 
of changing mark-ups on individual 
items unless this has been their prac- 
tice in tlie past. Mr Jackson Grayson, 
the Price Commission’s head, insists 
that the new system will be equitable 
but the Internal Revenue Service, 
which has to enforce price controls, is 
dismayed and so are the trade unions, 
which have been ostentatiously moni- 
toring prices in the shops. 

For real flexibility, however, the 
steel industry takes the cake. Last week, 
only a month after it had won the 
right to raise its prices and had 
scheduled increases of about 7.6 per 
cent on almost half its production, it 
succumbed to a round of price cutting. 
Ihe United States Steel Corporation, 
the giant of the industry, led the way. 
Mr Grayson was delighted by this 
evidence tliat the law of supply and 
demand was still working, while other 
conunentators expressed relief that 
price increases which would have 
spread through the economy would not 
now go into effect. 


THE BGONOMtST JfAMtTAkV 15^ 19 ^ 

There was some head-shaking, how- 
ever, over this evidence that steel was 
making so slow a recovery from thcr 
disasters of 1971 : record imports of 
foreign steel, a collapse of domestic 
orders and production when a strike 
was avoided, a sharp cut in profits 
which were already historically low. 
Users of steel still seemed to have the 
whip-hand, the car companies in par- 
ticular. They are reluctant to ask the 
Price Commission for permission to 
raise prices for a third time and they 
fear the reaction of consumers if the 
permission were to be granted. 

Second thoughts, however, are more 
cynical. This week the Wall Street 
Journal suggested that the price cuts 
had less to do with the state of demand 
than with the desire of US Steel to 
trump a move by the smaller Inland 
Steel Company : it was trying to get a 
larger share of Detroit’s business by 
offering discounts on large orders. 
Moreover, the industry has relinquished 
only about a third of the increase in 
prices which has been authorised. 
Lastly, even those cuts may be 
rescinded soon if the economy’s 
momentum continues to build up. If 
so, the steel industry may be throwing 
away much of the advantage won for 
it through devaluation of the dollar. 


Stubborn statistic 

If there is one figure which President 
Nixon would like to wish away in an 
election year, it is that for unemploy- 
ment. As 1971 ended 6.i per cent of 
the civilian labour force was out of 
work, almost the same as when the year 
start^. For the year as a whole die 
average rate was 5.9 per cent, the 
highest since the recession year of 1961, 
when it reached 6.7 per cent. In 1969, 
•the year that Mr Nixon became Presi- 
dent, the figure was 3.5 per cent. 


l^roughout the year close to 5m 
pec^le were without work. The average 

Unemployment 



monthly, seasonally adjusted . 
as % of civilian labour force g 

ss 

1 




IHIfj 




7 

■MHII 




m 

/ 





m 

■ 

rS 

! 

m 

m 

m 

B 

m 

1870 

1971 

I 






TRK ECONOMIST JAMJAkV I5, 1972 

period of unemployment was 11.4 
weeks, about 2.5 wet^s longer than in 
1970. The long-iternj unemployed — 
those without work for 15 weeks or 
more — ^averaged 1.2m, tiie highest 
annual level since 1961. Hardest hit 
have been Negroes — w'hose rate of 
unemployment, at about 10 per cent, 
was once more close to twice that of 
whites (5.4 per cent) — teenagers (16.9 
per cent), and ex-'servicemen froni 
Vietnam (8.8 per cent). Something new 
was a jobless rate of 2.9 per cent for 
professional and technical workers, the 
highest since 1948. 

Aim for 
red power 

rnOM A CORRESPONDENT IN MINNEAPOLIS 

Although the black power revolt set 
the stage for its Indian counterpart, 
Indians dislike the comparison. Indeed 
the red power effort has been milder 
and more gradual and has relied much 
more on the law courts. Even the 
Indians’ sporadic seizures of abandoned 
government properties appear more 
romantic tlian militant. Proudly In- 
dians say : “ We don’t bum buildings.” 

The emergence in Minneapolis of the 
American Indian Movement has 
generated a new kind of red power 
i^sed on the needs of the Indians who 
live in towns as opposed to those who 
have remained on the rural reservations 
and are subject to the paternalistic 
embrace of the federal government’s 
Bureau of Indian Affairs. The war cry 
of the angry young leaders of the Aim 
is for “ dignity and self-determina- 
tion ” ; it cuts acrosD the ancient tribal 
divisions and is a threat to the more 
traditional leaders who have concen- 
traited on the needs of the reservations. 
The activism of Aim makes the old 
guard nervous. In turn the Aim mili- 
tants talk of “ apple Indians,” red out- 
side and white inside. 

Half of the 793,000 Indians are off 
the tribal reservations, 320,000 of them 
in metropolitan areas, usually living 
in crushing poverty. Bad as conditions 
are on the resorvations, where the 
average income a head is $1,500 a 
year, the American way of life for the 
city Indians is even more dismal. Cut 
off from whatever protection the tribal 
organisation provides, badly educated, 
often ill-equipped for even the most 
menial j<As, victimised by racial bias, 
unequal to the tempo of white life — 
tiiey themselves joke about “ Indian 
time ” — and subject to a weakness for 
alcohol, urban Indians were slow to 
organise. 


Urban Indians start aiming 

Although Aim’s claim to have 95,000 
members is inflated, the movement 
which started three years ago has made 
its mark with its picketing, its demon- 
strations and its legal battles. At its 
first national convention last October 
in Minnesota Aim entered a more 
sophisticated phase, planning to 
capitalise on the guilt feelings of whites, 
to test President Nixon’s pledge to 
shake up the BIA and to consolidate 
a growing sense o*^ unity among young 
Indians on and off the reservations. 
Closely tied to all this is a yearning 
for the old religion and culture which 
absence from the tribal fold has inten- 
sified. 

Aim has formed a non-profit-making 
corporation to mobilise “ total Indian 
resources” and it is also looking for 
financial support both from Washing- 
ton and from private organisations. It 
is planning to participate in politics and 
to campaign for economic and civil 
rights through the courts. Aim has 
announced a drive for courses of Indian 
studies in schools and colleges and for 
mere books on Indians in public 
libraries. It has urged its members to 
demand equal time for reply when 
Indians are denigrated on the air. 

The militants have already had an 
effect on the BIA in Washington which 
has been plagued for montlis by disputes 
between the old-guard bureaucrats, 
mostly whites, and the young Indian 
activists. The latter now seem to have 
won the upper hand under the leader- 
.ship of Mr Louis Bruce, who heads 
die agency. The promotions and the 
reoi^anisations are designed to give the 
Indians more control over their own 
affairs. The BIA has also said that it 
will try to acquire an old Coast Guard 
station in Milwaukee wttich was seized 
by ithe Aim last summer. The Indians 
have already set up a school and a 
treatment centre for alcoholics there 
and the BIA wants these to continue. 


Pennsy crunch 

Since the Penn (lentral railway went 
bankrupt in 'the .suniiner of 1970, the 
courts and various federal agencies 
have })ccn trying to puzzle out what 
went wrong, wlio was at fault and 
w'hat should be done next. \ow it 
looks as if some answers may be forth* 
coming. The federal judge in Phila- 
delphia who is presiding over the 
reorganisation of tiie railw^ay has given 
P(‘nn CentraKs four trustees until the 
middle of next month to show whether 
the line can he operated at a ])rofit 
or whether it should he completely 
restructured, llie alternatives arc liqui- 
da/tion or some form of nationalisation ; 
the court's re(|uest for speed is an 
acknowdedgenient of creditors’ claims 
that they cannot wail forever. Also in 
Philadelphia, the city's district attorney 
has charged three of Penn Centrars 
former executives with contributing to 
the line'.s bankruptcy by illegally divert- 
ing more than $2im of its funds and 
by manipulating nearly $86m of its 
investments for their own profit. More . 
arrests could follow. 

rhe criminal charges which have 
lieen brought involve Executive Jet 
Aviation, Inc, a charter airline, and 
the Great Southwest Coqxjration, a 
land development agency. Mr David 
Bevan, Penn Central's former finance 
chairman, along with Mr Charles 
Hodge, once the company's chief invest- 
ment officer, and Mr Olberi Lassiter, 
former pre^ident of Executive Jet, have 
been charged with pouring Penn Cen- 
tral money into the airline to keep 
it going. They are also accused of 
using Penn Central money to drive 
up the price of the shares of Great 
Southwest, in which a private group 
of their own had heavy investments 
that were then sold at great profit. 
Penn Central's relationship with Great 


46 


AMERICAN SURVEY 


Southwest will be investigated at hear- 
ings to be hdld by the Securities and 
Exchange Commission next week. Mr 
Sevan -and Mr Hodge were also named, 
along witlh Penn Central’s former 
treasurer, Mr William Gerstnecker, in 
a suit brought by the railway itself 
last spring, for an unlawful conspiracy 
thaJt drove the company bankrupt. 

For its part, the Interstate Commerce 
Cqnumission, which allowed the crea- 
tion of Perm Central out of the old 
Pennsylvania and New York Central 
railways in 1968, has just made public 
a report prepared by its staff on the 
manage riia/1 nurslakes (as distinct from 
the financial irregularities) that led to 
the biggest bankruptcy in history. One 
of these was the inattention paid to the 
collapse of good service following the 
merger so that many shippers took 
their freight edsewherc. Its troubles not- 
withstanding, Penn Central today 
carries about 13 per cent of the 
country’s freight and for that reason 
is likely to be kept running by one 
means or another, even though the 
Nixon Administration will only very 
reluctantly agree to anything that 
smacks of nationalisation. 

Those who ran 
away 

There may be as many as 75,000 young 
American men who have fled the 
countiy to escape military service 
during the Vietnam war. Most have 
gone to (Canada, some to Sweden ; 
others are scattered round the world. 
With the winding down of the war and 
the new national policy of achieving 
an all-volunteer rnilitarv force by 1973, 
a movement to bring the exiles home is 
growing. I'he sheer weight of numbers 
helps ; the families and friends of the 
absent men number hundreds of 
thousands. Many (but by no means 
all) of the exiles are eager to come 
back, moreover. 

But under what terms can they be 
invited to return ? President Nixon 
modified his previous hansh view on the 
subject by recalling, during his recent 
long television interview, that Abraham 
Lincoln had offered amnesty to 
deserters on the Union (northern) side 
during the last year of the civil war, 
provided that they rejoined their units 
and served out their time. However, 
Mr Nixon declared that no amnesty 
could be considered while Americans 
were still fighting and while some were 
hdd prisoner in Vietnam. 

A-iWactical formula has been offered 


by Senator Robert Taft of Ohio. He 
has presented the Senate with a bill 
that would give the returning con- 
scription evaders immunity from prose- 
cution in exchange for three years of 
public service. He specifically excluded 
deserters, however, from his proposals 
and has thereby drawn criticism that 
his bill discriminates against the poorer 
classes. Actual desertion from the 
service has reached the proportions of 
an epidemic during the current war ; 
the desertion rate of 142.2 for each 
thousand men is nearly double that of 
the second world war. It has been 
argued that these are poor and poorly 
educated men who do not have strong 
views about military service until they 


TME EQONOJkaSt JANUARY 15^ I97R 

experience it directly, unlike the more 
intellectual, more affluent young who 
decide in advance of induction why 
and how they want to avoid military 
service. A great many more people, 
naturally, are opposed to amnesty in 
any form, on the grounds that it would 
be unjust to the law-abiding young 
men who fought and many of whom 
died because they served when called. 

The search for a solution mu.st take 
into account the 3,500 or so young men 
who have completed prison sentences 
for conscription offences and also the 
increasing number of deserters who 
have returned to face the authorities 
only to find that they are not prose- 
cuted but are quietly discharged. 


Thrift is big business 

FROM A SPECI-Al CORRESPONOENT 


Turning some people’s cast-offs into 
other people’s put-ons is a business 
grossing some miiiio>ns of dollars a year 
in America and pouring money into the 
coffers of charitable organisations. This 
business is carried on in New York 
city’s 22 thrift shops, mostly on the 
fashionable upper East Side, and in 
similar shops all over the country. They 
sell secondhand articles of all kinds, 
provided that they arc in good condi- 
tion ; furs (priced as high as $1,000 
for a mink coat), household goods, 
jewellery and antique furniture are 
among the most saleable goods. All the 
stock comes as gifts which pour into 
the shops almost too fast to be 
unpacked and entered. 

The cxplamtion of this lavishncss 
is that the donors can deduct the value 
of their contributions from their incomes 
for tax assessment purposes. As a 
result the givers certainly pay less lax 
and may even find themselves paying 
at a lower rate. The thrift shops send 
a receipt for each gift, with a careful 
valuation ; professional dealers, always 
on the look-oul for interesting items, 
often offer free appraisals. The receipt 


is used as evidence when the donor 
claims exemption from lax anJ the 
Internal Revenue Service cheeks assid- 
uously on the.se claims. 

A successful shop has one or two 
paid managers and a paid porter who 
cleans the premises and moves heavy 
objects. But the secret of the 
enormous financial success of these 
shops, which show a net annual profit 
of more than 50 per cent, is the time 
and hard work provided by volunteers. 
These women may be interested in the 
particular organisation responsible for 
the shop (some are run by a group of 
charities;. Or a volunteer may ha\e 
time on her hands which she wants to 
devote to “ good works.'’ 

There, are various ingenious ways of 
stimulating donors to be thrifty. One 
organi.sation holds a lunch and fashion 
show each spring at the famous Plaza 
Hotel. Parcels are brought along and 
there are prizes for the donors who 
have contributed the most valuable 
goods. Another organisation gives a 
“ Strip Tea ” ; each guest is asked to 
leave behind an article of clothing or 
jcw'cllcry. 



Shopping for charity 



THE ECONOMIST JANUARY 1 5, 1 972 


Who lights the envitonmetYt of the 
Department of the Environment? 


. f4 


Atlas do, and what^s more, largely with 
perfectly standard Atlas Pop Packs* 

The Department of the Environment is tlie new multi-ministry 
dedicated to giving us all better surroundings in whicli to work and live. 

What they do with their own ofhee environment has 
some signilicance for all of us. 

So that their choice of Atlas fluorescent 
tubes and fittings (close on a million 
of them lor their own and other government 
departmental use) is something wliich makes 
Atlas glow with pride. 

Oif-thc-peg for Brummell. 

Astonishingly, moreover, most of the Atlas 
littings chosen by the Department are perfectly 
standard Pop Packs: the kind you can buy 
over the counter or write into any specification 
tomorrow morning. 

It’s rather as if Beau Brummell were electing 
to v'car off-the-peg breeches or Brillat-Savarin had 
started eating out of cans. 

But then. Atlas’s new run-of-the-mill stark white finished Pop Pack 
fittings are the run of a very superior mill indeed. 

Pop Packs are some of the many thousand different ways 
Atlas can lighten and brighten your environment. W rite, telephone 
or drop by personally lor specific information: 
i. Thorn Lighting, Thorn House, Upper Saint Martin’s 
Lane, London WC2H 9ED. Telephone: 01 836 2444. 

Telex: Thorn London 24184/5. 



A A 

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1W** 

Tf] •IIAMIIIHIINO 10 IMORN lIGHtINU 
IIMIIfli IIMI11U 


Atlas Popular Packs 

upthere 


Alcoa Aluminium was 
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1933 Alcoa helped design lightweight 
aluminium tube trains for underground 
transport systems As the world’s 
largest aluminium company, Alcoa 
IS a vital part of the current 
transportation revolution 



1960 The convenient tear-off feature 
for opening cans has been one of 
Alcoa’s most popular developments 
Today a wide variety of food is 
available in containers with these 
easy-open aluminium tops. And 
for tomorrow wc have more exciting 
packaging innovations coming up. 



1969 We’re proud of Alcoa’s part m 
man’s journey to the moon Eagle, the 
first manned spacecraft to land 
on the moon, was an aluminium 
structure embodying many of Alcoa's 
innovations Today we're oniy the 
world's largest aluminium company 
Tomorrow . i 



Sometimes a business 
has trouble defining 
its problem until Alcoa 
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solution. 


We’re constantly 
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Give some thought 
as to how Alcoa' 
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i Ti irL 


For innovations in aluminium, 
consider Alcoa first. 


QALCOA 


Alcoa of Great Britain, Ltd 

Alcoa house, Droitwich, Worcestershire. 


THE PROBLEM : 

Long-distance travel fatigue 


hirr 

r 10 
oiip 

the 

He- 

ld- 


•n 

'»e 


AiX icst needed 

OUK MKDfCAl, C0N<^t1LTANT 
Continuous flvinjX ran 
rau<r bofh physical and mental 
stress especially ^^bon jonrnevs 
involve the dateline. Fatigue, 
anxiety, appetite changes and 
faintness are all common svmp- 
lonis and after a prolonged ex- 
posure it takes 24 to 36 hours 
rest for the body batteries to re- 
charge. 


I 


) 

i 


t( 

a 

b. 

M. 

£ 

arr* 


The Daily Telegraph, Wednesday, October 6, 1971 


And our solutions for certain destinations: 


AUSTRALIA. I he Traris- Asian Express, Friday (15.00 
from Copenhagen) to Singapore, v;hore you arrive 
at 14.00 Saturd.iy. lake a 7-hoLir break before you 
go on by connecting flight at 21.00. Arrive in Syd- 
ney at 9.20 on Sunday mo.ning. Time lor rest be- 
fore Monday morning 24 hout.-, (and you will bene- 
fit from the 7-hour break in Singa()ore, too). 

NORTH AMERICA, west ( oast. 1 he Pacific Express, 
Saturday (12.45 from Copenhagen) to Seattle (arri- 
val 13.40) or Los Angeles (arrival 17.05). lime for 
re.s/ before Monday morning: over 40 hours. 
SOUTHEAST ASIA. The T rans-Asian Express, Satur- 
day (12.05 from (>)penhagen) to Bangkok (arrival 
Sunday 8.00) or Singapore (arrival 10.35). Connect- 
ing flight f'om Bangkok to Hong Kong (arrival 11.30). 
Time for rest before Monday morning: 25122121 
hours. 

JAPAN. The Trans-Siberian Expres.s, Saturday (12.00 
from Copenhagen) to Tokyo (arrival Sunday 9.05). 
Time (or rest before Monday morning : 24 hours. 


PLEASE NOTE: 

• There arc excellent connections from all over 
western and central Europe for the departures 
from Copenhagen. 

• The sugge.stions above are just examples, select- 
ed to provide for a Sunday rest at your destina- 
tion. We have flights on other weekdays too. 

• To go via Copenhagen means, in most cases, that 
you follow the Great Circle closer than by any 
other routing. Your alternatives are: Co via Co- 
penhagen, or make a detour. 



XCT 


General Agent for Thai bitemational 



ttift ituoikaiiBt jANif^ABy i97it 



You're never alone with 
a book 

THE PENGUIN COMPANION TO 
LITERATURE : 

BRITAIN AND THE COMMONWEALTH 

Edited by David Daiches. 

EUROPE 

Edited by Anthony Thorlby. 

USA AND LATIN AMERICA 

Edited by Eric Mottram, Malcolm 

Bradbury and Jean Franco. 

CLASSICAL AND BYZANTINE ; ORIENTAL 
AND AFRICAN 

Edited by D. R. Dudley and D. M. 
Lang. 

Allen Lane, The Penguin Press. S76, 
908, 384, 360 pages. 13, £3.75, 
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There is a heartv publishing consensus 
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entries and proclaimed as the fruit of 
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tycoon of reference books, has had a 
companion in print since the 1930s. 
But who, for heaven’s sake, are these 
bodes for ? If one really cares, it is 
extremely useful to have a companion 
with the correct spelling of Gioila 
Brighde Albanach Mac Gonmidhe or 
Johann Jakob Christoffel von Grim- 
melshausen at his fingertips — or are 
books feminine ? — ^just as if one really 
cared to read either in the original 
Gaelic or German, the company of a 
dictionary would no doubt be welcoone. 
But what makes a dictionary a 
companion ? 

In Oxford’s eyes, it is evidently a 
simple matter of sheer bulk. “The 
Concise Oxford Dictionary of English 
Literature’’ is merely an abbreviation 
of the latest edition of the companion. 
On that score, Penguin’s series, run- 
ning to a combined total of over 2,200 
pages, is certainly well named. But its 
editors still seem bedevilled by an 
uncomfortable uncertainty of purpose. 

Even vnth four fat volumes to fill, 
their job was more one of rejection 
than discovery. Entries, by a catholic 
collection of specialists (wi& a fair pre- 


ponderance of Sussex dons) are limited, 
almost entirely, to authors, which 
means that they are usually long 
enough to rise well above the hagiogra- 
phical blandness of reference prose. 
And in the introductions it is made 
fairly clear that it is literature only 
that is under review. But it is hard to 
have the courage of that particular 
conviction. In the volume devoted to 
the United States and Latin America 
(an awkward grouping, this) it is 
admitted that this distinction breaks 
down, because of “ particularly 
shadowy borders between literature 
and non-literature in the United 
States.” One suspects that it is as 
much because Messrs Mottram and 
Bradbury had to be less rigorously 
selective than .their fellow editors of the 
series. Since literature has mush- 
roomed, the general rule appears to be 
that non-fiction writers have a better 
chance of inclusion if they lived before 
1800 : Hume succeeds but not Wittgen- 
stein, Hobbes but not Marx, though 
there is an apologetic little entry 
restricted to marxist views on art and 
literature. Space is, after all, at a 
greater premium in the European 
volume. 

One can nit-pick at the choice of 
authors for any compendium. But a 
who’s who is a slightly unhelpful com- 
panion; unresponsive to straightfor- 
ward questions on literary fashions, 
terminology, characters, nicknames or 
allusions. It is also, inevitably, imme- 
diately out of date. One learns far 
more about the achievements of 
modem African writers from this series 
than from any African reference book, 
but in a few cases one does not learn, 
for example, that they are already 
dead. The African entries appear, per- 
haps understandably, to be the most 
out of date. 

It seems that die novels of 1971 
appeared too late for inclusion in any 
volume, but each of the first three 
books comes well up to the end of 
the 1960s. Tlie choice of modem 
audxors is good ; to walk the tightrope 
between snobbery and pap is difficult 
for any editor. Longman’s “ Com- 
panion to Twentieth ^ntury Litera- 
ture” gets down to Biggies and Enid 
Blyton ; Penguin eschews these but 


5* 

includes Ian Fleming ; “ The Concise 
Oxfoid Dictionary” excludes even" 
Murdoch, McCarthy and Naipaul. But 
then it explains rnendelisni, the 
Oxford sausage, Baedeker, E^eranto 
and the origin of the word Easter, and 
all tliose Dickensian characters are 
traced to their right books. 

No one needs a companion to read 
a novel, at least in his native tongue ; 
the most he should need is the odd 
footnote. He may well need a com- 
panion to read the literary critics. Pen- 
guin lacks Oxford’s clear sense of pur- 
pose, which is to explain every abstruse 
reference that might bewilder the soli- 
tary reader. But faced with a dense 
piece of criticism, it would be a hard 
choice between the two. It would have 
to depend on the source of the work : 
an Oxford don whose syllabus ends 
with a brief sortie into the twentieth 
century would suggest the one ; those 
Sussex cross-culture courses peopled 
with obscure rural authors would 
naturally require the other. 

State of the nations 

THE SPANIARDS : AN INTRODUCTION 
TO THEIR HISTORY 

By Americo Castro. 

University of California Press. 640 
pages. £7.15. 

The Spanish, especially at the official 
level, have never tired of telling the 
world that “ Spain is different.” This 
is abundantly clear to all who know 
their unique and interesting country, 
but when it comes to defining the 
nature of the difference, the difficulties 
begin. Spain is almost an island, cut 
off from Europe by the Pyrenees, and 
isolated by the Mediterranean and the 
.Atlantic. Its history is immensely com- 
plicated, in political terms. It is only 
in modem times that its inhabitants 
can be called Spanish, as opposed to 



W5: Hispania, baeonring Spanish 



52 

Leonese, Aragonese, or Castilian— and 
it is still questionable how far the 
Catalans and, even more, the Basques 
accept their absorption into this 
modern, unified Spain. 

I'he civil war of 1936-39 emphasised 
still further the divisions of Spain, 
between rich and poor ; between the 
urban (concentrated in two large 
centres, Barcelona and Bilbao) and tlie 
rural life ; between the Catholics and 
the anti-church. The iiear-illiterate 
poor were virtually isolated from the 
political life of the country', concen- 
trated in Madrid, and in the bourgeois 
section of Madrid at that. 

■ But in the past decade Spain has 
exploded into the twentieth centujy, 
with a fantastic tourist boom ; with 
the “ Spanish miracle ” of economic 
advancement for all sections of the 
community ; and with the end of the 
myth that the Spanish people, almost 
alone in Europe, were happy in isola- 
tion and poverty and in tlie virtues of 
the really simjde life. I'he massive 
migration from the comitry to the 
city has brought in its train a prolifera- 
tion of television aerials (and sets), of 
washing machines, and of cars, which 
have replaced the mule and the 
bicycle, riic new social division has 
become that between the “ seatones 
(the owners of the little Fiat cars, made 
in Spain as Seats) and the “ peatones ” 
(the pedestrians). The revolution has 
gone far — on tlie surface ; but it has 
been an economic and a social revolu- 
tion, and superficial at that. It has not 
been reflected in political terms. To 
cross the Pyrenees is still to enter a 
(liflferent world from that of tfie rest 
of Europe. But tlie longer one lives 
in this attractive land tlie harder it is 
to isolate the es-sential elements of the 
diffei-ence. 

Professor Aiiierico Castro has been 
concerned for many years with analys- 
ing this difference, and he has suc- 
ceeded to a remarkable degree in his 
latest hook, which, is an cxpan.sion and 
a revision of Ills earlier work, “ The 
Structure of Spanish History,” pub- 
lished some 17 years ago. This present 
work, controversial as it will certainly 
be among Spanish scholars, is going 
to be essential to anyone attempting 
to analyse the character and nature of 
the Spaniard of today, a.s much as the 
Spaniard of eailier periods, Spain may 
be peculiar in its isolation, geographic- 
ally and historically ; and Spanish life 
has been undoubtedly, as Professor 
Castro writes, unique and splendidly 
unique. But it is essential to realise, 
as he points out, that what we call 
.Spaniaris 4 '^ not exist in the penin- 


BOOKS 

sula until the thirteenth century ; that 
the Spanishness of the Iberians and of 
the Celtiberians is a legendary fiction, 
much loved in many quarters in Spain. 

We must look back to this early 
period if we arc to understand the 
Spaniards of today — and, as Professor 
Castro is at pains to emphasise, all too 
few Spaniards are willing to accept 
this fact. In some ways, modern Spain 
is an artificial creation and, essentially, 
an amalgam of three cultures — Christ- 
ian, Jewish and Moorish — and of a 
number of .separate kingdoms, prin- 
cipalities and “ nations.” But the 
Spaniard of today is a distinct person, 
with an important contribution to 
make to the life of Europe. This book, 
whicli is not easy reading, is a major 
contribution to an understanding of 
the modern Spaniard, and any serious 
consideration of Spanish, and indeed 
Iljcrian, problems will have to take 
Professor Castro’s view into account. 
A remarkable fact, considering that 
the author’s eightieth birthday was 
celebrated in 1965 : even more 
remarkable is the fact that a Spanish 
scholar (though an American citizen) 
can be so remarkably detached about 
his own country. 

Causes unknown 


THE LAST LIBERAL GOVERNMENTS, 
VOLUME 2 : UNFINISHED BUSINESS, 
1911-1914 

By Peter Rowland. 

Barrie and Jenkins. 419 pages. 
£4.50. 


This is the second and last of two 
volumes by Mr Rowland tracing the 
fortunes of the Liberal government 
from its beginnings in December, 1905, 
to the outbreak of the war in 1914. 
He writes from an openly partisan 
point of view. His loyalty and commit- 
ment arc to the Liberal caust* ; and he 
writes of its failures and missed oppor- 
tunities very much in the tone and 
manner of a present-day left-wing 
Labour supporter writing about the 
Labour government of 1964-70. 
Liberalism, as he remarks ait one point, 
allowed itself to \k ” blown ofl* course.” 

Theories about how and why 
Liberalism died are much in evidence 
in current historiography. Recently Dr 
P. F. Clarke offered his suicide theory. 
There is tlie well-known version of 
the murder theorv by Mr T. G. 
Wilson, And of course Labour 
historians have always been specialists 
in the natural causes theory. The 
classiic Liberal explanation ha.*? always 
been death by misadventure. Mr 
Rowland certainly subscribes to this : 


THE ECONOMIST JANUARY 15, 

but clearly he is not altogether content 
with it. He has leanings towards a 
kind of semi-suicide theory. The 
consistent burden of his text and his 
argument is that Liberalism in 1905 
stood for a new era of enlightenment 
and progress and that it possessed 
appropriate political and historical 
credentials awarding it certain pre- 
rogatives -to fulfil a necessary and 
indeed long overdue programme of 
social reform and reconstruction. The 
burden of Mr Rowland’s conclusion is 
that the Liberal governments of Camp- 
bell-Bannerman and Asquith failed to 
honour their credentials to the degree 
that they had fallen short of require- 
ments in certain decisive respects. 

Mr Rowland’s central problem is to 
reconcile the basic anti-natural causes 
theory with this conclusion involving 
some kind of crucial Liberal incapa- 
city or debility. Why wa.s it that, 
though put in office in iqo*) with a 
massive majority at a time v/hen the 
“ climate of opinion ” was “ ripe for 
some fairly drastic reforms,” the 
Campbell-Bannerman ministry was 
“ no more interested in social reforms 
than its predecessor'’ (with the 
exception of such old-fashioned things 
as temperance); and was “almost 
totally out of touch with progressive 
thought in the country ” except on such 
“ ephemeral i.ssues as ‘ Chinese 
slavery ’ ” ? Why was it that Asquith’s 
attitude to the beginnings of the 
welfare state was ” inau.spicious *’ ? 
Why did Asquith’s response to 
Snowden’s demands for the constant 
amelioration of the social conditions 
of the less favoured clas.ses at the 
expeme of other classes “ not, perhaps, 
augur well for the future ” ? The 
central weakness of Mr Rowland's 
fxx>k.s is that he does not have enough 
control of his subject and his sources 
to analyse the paradox which he thus 
po.ses for himself through 'to a convin- 
cing resolution. He adopts an aggres- 
sively teleological stance : he judges 
the Liberal governments on the basis 
of absolute historical requirements 
which they failed to measure up to. 
Yet he is occasionally aware of tlie 
fact that those governments did not 
and could not share his teleology. He 
admits that it is. “all too easy” to 
compile a list of “ all the things they 
failed to do.” He even admits that the 
Libera! governments did not in any 
event intend to create anything 
approximating to a welfare state. 

Perhaps the clearest and most 
consistent example of confused think- 
ing is revealed by the author r end- 
lessly denigratory treatment of Edward 



THE ECONOMIST JANUARY 1 5, I972 


BOORS 


33 


Grey. The great offence is of course 
the charge against him of the radicals 
of the day : that he conducted Liberal 
foreign policy behind the back of the 
Liberal party. This, equally of course, 
was profoundly true. But the historical 
question that arises is, was this a 
t^ection on the policy or the party ? 
Mr Rowland is content to quote some 
arrant nonsense from a (manifesto of 
the Independent Labour party about 
the country being faced by “ red ruin 
and the impoverishment of war ’* 
through Grey’s criminallv allowing it 
to be dragged at (the heels of despotic 
Russia,” and comment : “ The charge 
is unanswerable.” What Grey ought 
to have done, according to Mr Row- 
land — quoting some more arrant non- 
sense by A. G. Gardiner in iqo8 — was 
to have restored the concert of Europe. 
But surely Mr Rowland should be 
aware that this feat had been beyond 
Palmerston in the 1860s, Disraeli in 
the 1870s, Gladstone in the 1880s, and 
Salwbury and Roseibery in tthe i8gos. 
There was simply no concert of 
Europe to restore. 

As a political narrative, apart from 
issues of interpretation, this book will 
always be useful There is not enough 
original manuscript material (nothing 
except the Asquith papers outside 
Ix>ndon) and there are too many 
irritating slips (Battenburg, Gustav 
Princeps); but Mr Rowland has read 
pretty well all the printed sources and 
has put pretty well all of them in. 

Coal was life 

THE DURHAM MINERS, 1919-1960 

By W. R. Garside. 

Allen and Unwin. 544 pages. £6. 

This painstaking volume, a welcome 
addition to the local histories of 
mining and miners, is heavy with facts 
but somewhat short on analysis. The 
author laboriously makes his way 
through the years from the end of the 
hrst world war to 1959, not a very sig- 
nificant date m Durham, cataloguing 
all the relevant statistics and chronic- 
ling all the major events. Yet we 
catch little of the distinctiveness of 
Durham except in occasional glimpses, 
and the separate chapters on econo- 
mics, politics, living conditions and 
trade unionism segment human 
experience rather ^an recapture 
changing hopes and fears. The best 
sections are tliose which deal with 
economic conditions and the least 
satisfactory those which deal, very 
summarily, with politics. 

Two-thirds of the bodk cover the 
period before 1939, and there is too 



The last trump ? 


little about the social life of mining 
communities after that date. 'Fhe 
chapter on social ’ fe before the second 
worid war springs to life when a few 
nimets speak directly for themselves , 
their words were recorded ui J. New- 
som’s “ Out of the Pit,” published in 
1936. There is al.so an admirable 
appendix describing life m a Durham 
pit village in the 1920s ; the original 
source is unknown, but it was printed in 
the Durham a'ea section of the annual 
report of the National Union of Mine- 
workers in 1958. 

Dr Garside, who is the son of a Dur- 
ham miner, points out rightly in his 
prologue that the greater part of the 
activity of the Durham miners liefore 
1947 can lie said to centre on the 
struggle for nationalisation. Sam Wat- 
son, who had hailed the Labour vic- 
tory of 1945 as a more important event 
than the explosion of the atomic Iximb, 
said proudly on vesting day : “ No 
longer are we woriting for colliery 
owners. No longer are profits being paid 
to absentee owners. No Ioniser is it 
‘ They and Them ’ — ^it is ‘ We and 
Us.’” Would that it were, in 1971. 
By *950. however, it was abun- 
dantly clear that the problems of the 
Durham coal industry were continuing 
to grow in seriousness after nationalisa- 
tion. And they were not merely 
economic problems. Manpower shor- 
tages and rising costs were accompanied 
by industrial disputes, and technological 
progress was slow. It is a pity that Dr 
Garside’s book p^rs out rather than 
leads to a conclusion. We sue given no 


as.sessment of the likely relationship 
between the historical record and 
Durham’s future. Coal was the life of 
Durham . what will take its place f 

Thawing the permafrost 

THE SIBERIANS 

By Farley Mowat. 

Heinemann, 313 pages, £3.20 
A SIBERIAN ENCOUNTER 
By Gaia Servadio. 

Weidenfeld and Nicolson 241 
pages, £2,50. 

No wonder Mr Brezhnev wants western 
capitalists to come in and help him 
exploit the fabulously rich wastes 
of Siberia, that vast expanse of land 
east of the Urals whose name means 
the sleeping land. Siberia may lie 
immensely rich in resources from gold 
to oil, but how do you get at them 
when three-quarters of Siheiia are 
under “ pennafrost ” — or eternal frost, 
as the Russians call it, more poetically 
— a crust of ice, frozen bog, soil, gravel 
and rock whose niaximum frost depth 
is about 5,ooofl That is in north- 
west Yakutia, Sibena’.s coldest region 
where temperatures of minus '^6.6*C 
have been recorded. Mr Mowat, 
who IS a Canadian writer and an 


The Stages of Economic Growth 

Second edition 

W. W. ROSTOW 

An account of economic growth based on a 
dynamic theory of production and interpreted 
in terms of actual societies. Professor 
Rostow distinguishes five basic stages of 
economic growth, explains each in derail 
and gives illustrative examples 

Hard covers £2.60 net 
Paperback £0.80 net 


DEPARTMENT OF APPLIED ECONOMICS 
OCCASIONAL PAPER 26 


The Role of Investment In the 
Development of Fiji 

MICHAEL WARD 


This paper presents a case-history of Fiji's 
recent experience in relation to private and 
public investment It discusses the nature, 
composition and geographical locations of 
investment as well as its relevance to the 
development of new industnes, particularly 
tourism To be published shortly. 

Hard covers £4.00 net 
Paperback £2.40 net 



CAMBRIDGE 

UNIVERSITY 

PRESS 


54 



Frozen fox : not a convenience food 

authority on the Eskimo, is very good 
at explaining how Siberia's inhabitants 
are coping with problenu^ of this kind, 
and how it has become a major 
industrial region of the Soviet Union 
with a living standard which is 
appreciably above the Soviet average. 
(It has to be, of course, if it is to 
attract all those engineers and other 
professionals that Siberia so badly 
needs.) 

Mr Mowat does not discuss the more 
traditional Siberia which first became 
famous in the time of the tsars : the 
Siberia of tlie exile and, in Stalin’s 
time, of vast labour camps for political 
dissidents which have not disappeared 
under his successors. On sponsored 
tours — and Mr Mowat made two such 
tours in order to write this book — that 
sort of thing does not come into view. 

But Mr Mowat is well informed on 
Siberia’s “ small peoples.” There were 
over 100 such peoples when the first 
Cossacks came to Siberia in the 
sixteenth c:entury ; now only 29 remain. 
But they are proud, hardy, resourceful 
and still play a role in moulding the 
new ” Siberians who come to settle 
from other parts of Russia into proper 
natives. 

Miss Servadio, an Italian-born 
London journalist and novelist, has a 
predictably southern frame of reference. 
When she reaches Georgia in the 
Caucasus, she feels thoroughly at home 
and aptly compares the Georgians to 
the Sicilians. She inaccurately makes 
the. Jesuits, rather than Orthodox 
priests, responsible for the early train- 
ing <rf Georgia’s most famous son, 
St^in. But , her political judgments 


BOOKS 


TH£ ECONOMIST JANUARY 15 , ^972 


about the Soviet Union are sharper than 
Mr Mowat’s. When he talks to students 
in Yakutsk about the problem of 
dissidence, he is happy to accept the 
bland reply : When a horse is going 
the right way, why kick it in the ribs ? ” 
While the Soviet citizen may be 
politically repressed, both Mr Mowat 
and Miss Servadio report that, sexually, 
he is not. Both provide the same 
curious piece of information that, 
because of the housing shortage in 
Moscow, lovers who can afford it have 
to resort to the Moscow-Leningrad 
train. 

Granted asylum 

THE TRADE IN LUNACY 

By William LI. Parry-Jones. 

Routledge and Kegan Paul, 379 
pages. £4.75. 

Private madhouses conjure up a 
sordid vision of all the horrors of 
eighteenth-century Bedlam, coloured 
by the profit motive. These houses first 
came into being in the eighteenth 
century to fill a need, and they 
continued to do so, as Dr Parry-Jones 
points out in his interesting and 
{)ainstaking book, throughout a long 
career as victims of the most violent 
abuse. The major public service they 
rendered is little known : until the 
mid-nineteenth century they were the 
principal institutions catering for the 
insane, and in 1848 there w>cre nearly 
150 private asylums in England, hous- 
ing a full half of tlie total number of 
confined lunatics. More than half of 
the patients at that time were paupers, 
boarded there by the parishes because 
the counties were dilatory in building 
asylums. Only when reluctant authori- 
ties were compelled to build asylums 



Victorian prints fad public fears 


did the private establishments begin to 
concentrate very largely on wealthy 
patients. They still do $0, accommodat- 
ing about 1 per cent of the country’s 
psychiatric inpatients in licensed 
mental nursing homes.” 

Abuses occurred, though probably 
through very poor physical conditions 
and laggardliness in giving up primi- 
tive forms of physical restraint, rather 
than through wrongful confinement for 
corrupt motives. This was a subject 
of constant, almost superstitious horror, 
but the evidence suggests that it has 
always been extremely rare. It is clear 
from this book that the blame for 
poor conditions must be shared : some 
of it lies with the public authorities 
who, anxious to save every penny of 
the parishioners’ money, negotiated 
contracts for the care of pauper 
lunatics which could not cover decent 
comforts. There were demands for the 
quicker abandonment of physical 
restraints, but money was not found 
for the necessary precondition — ^more 
staff for humane supervision. The same 
process goes on in our own time in 
the public field : subnormality hospitals 
are starved of money and thus of all 
that money can buy, and are then 
criticised for poor conditions. The 
private madhouses have had an 
unrelentingly bad press, but much of 
it was unjustified, especially if one 
considers the appalling conditions in 
other institutions of the time. As Dr 
Parry-Jones correctly says, they attrac- 
ted all the misgivings and suspicions 
that are still often felt for any system 
of private care and treatment, but 
more particularly because of the fears 
that insanity has always aroused. 

Lifeless 

THOMAS HARDY 

By J. I. M. Stewart. 

Longman. 249 pages. £2.50. 

Whatever led Mr Stewart to subtitle 
his book “A Critical Biography”? It 
is nothing of the sort. The only 
attempt to trace Hardy’s life-story is a 
two-page-long chronological table 
annexed to the text, lire reader is 
assumed to be familiar with his 
origins and upbringing, and no time is 
wasted in recounting the circumstances 
of his life in maturity or (dd age. True, 
the first chapter deals with Hardy’s 
evasive autobiography, and in the 
second, "Private Life,” Mr Stewart 
says his say about Tryphena Sparks, 
Emma Gifford and Florence Henniker 
(not, however, about Florence Dug- 
dale, who became the second 


THE BOOMbinST janoary 15, 19711^ 


BOOKS 


55 



Hardy, by Augustus John 


Hardy). But essentially the book is a 
study of Hardy’s writings and their 
relation to his personal background. 

Mr Stewart discusses the various 
facets of Hardy’s emotional and intel- 
lectual make-up, in the light of T. S. 
Eliot’s allegation (in “After Strange 
Gods ’’) tliat not only were Hardy’s 
works generated by an overriding urge 
for self-expression, but that the self 
.so expressed was a morbid one. The 
charge is rebutted by an examination 
of each of the novels ; nor is the minor 
fiction omitted. “ The Dynasts ’’ and 
the poems are also considered. More 
than four-fifths, of the book, in fact, is 
straight literary criticism. Its author’s 
familiarity with the whole field of 
Hardy studies is abundantly evident, 
but his contribution differs from most 
of the worthy discourses in its relaxed 
and often humorous tone. 

Hardy affected to despise novel- 
writing, as a mere means towards 
bread and butter. It was to poetry that 
he devoted the later years of his life, 
and he wanted to be remembered as a 
poet. Significantly, Mr Stewart, in his 
survey of the whole of Hardy’s output, 
reserves unqualified praise for the 
small group of poems written imme- 
diately after the death of Hardy’s first 
wife. These he calls “some of the 
greatest love-poems in the language.” 
Anyone who enjoys reading Hardy’s 
fiction will get a great deal of pleasure 
and stimulation from reading the com- 
mentaries on the novels; and he will 
be mniuded that no balanced estimate 
of Hardy’s achiewment is possible if 
the poetry is disregarded. 


Mostly war 

BRITISH WAR AIMS AND PEACE 
DIPLOMACY, 1814-18 

By V, H. Rothweli. 

Clarendon Press : Oxford University 
Press, 315 pages. £4.25, 

This is one of the first studies of 
British war aims during the great 
war to be based on a thorough 
investigation of the cabinet and 
Foreign Office papers. Dr Rothwell’s 
research bears out his claim that the 
importance of internal pressures on 
those responsible for the formulation 
of war aims and peace terms has been 
considerably exaggerated, but his study 
shows how completely the Foreign 
Office monopoly over foreign affairs 
had been shattered. Lloyd George’s 
negotiations, through his own agents, 
with Austria-Hungary and Turkey 
were not even known to the members 
of the Foreign Office. But even the 
prime minister was not his own master, 
for* the war cabinet was repeatedly 
hampered in its efforts to find allies 
and to detach Germany's supporters 
by the overriding claims of the 
general staff. One of the most interest- 
ing themes in this careful analysis of 
the interaction between war aims and 
the fortunes of war is the key role 
played by General Robertson, who 
successfully championed the “western 
case ” despite the military stalemate, 
and who acted as a powerful restraint 
on those willing to seek a negotiated 
peace with Berlin. 

The fundamental fact which emerges 
from this book is the limited nature 
of British war aims — the destruction 
of Prussian militarism (litde is said of 
when this distinction between the 
military and the German nation was 
drawn) and the restoration of an inde- 
pendent Belgium. The war was fought 
to smash German military power ; all 
other aims were subordinate to this 
one goal. Apart from hopes for an 
extended influence in the Arabian 
peninsula, other projected territorial 
changes were either the result of efforts 
made to attract Italy, Bulgaria and 
Turkey into the allied camp or to 
achieve an independent settlement with 
Austria-Hungary and Turkey. The 
disastrous Passchendaele offensive 
reinforced the conservative direction of 
British thinking ; the huge casualty lists 
led Lloyd George seriously to consider 
a negotiated peace For the final 
collapse of the central powers took the 
British by surprise and even during the 
armistice discussions the prime 
minister feared that the Germans 


might reject the extreme naval terms 
demanded by “ our stupid admirals ’* 
and that the slaughter would continue. 

This is a book for specialists, though 
the author’s findings have a wider 
significance for students of the war 
and the peace settlement. The strictly 
chmnological approach makes for a 
good deal of unnecessary cross- 
referencing and demands considerable 
knowledge of the issues involved. Very 
little is conceded to the less expert 
reader, but an introductory chapter 
and scattered comments suggest that 
Dr Rothweli both understands and can 
write convincingly about the broader 
questions which his study raises. It is 
unfortunate that Oxford University 
Press did not encourage the writer to 
turn what must have been an original 
and important thesis into a coherent 
and readable book. 

Under inspection 

THIS DIRTY WORLD 

By Ronald C. Denney. 

Nelson. 211 pages. £2.50. 

This is outside the usual angiy run of 
anti-pollution books, in that Dr 
Denney is as nnich concerned with 
clearing up the mess as with who or 
what caused it. He has no doubts on 
the second count — we did. This leads 
to the somewhat sour conclusion that 
the way to reduce pollution is to 
reduce population, by preventing 
people from being born. However, 
failing that, but given money, the will 
and the strong arm of the law, he 
believes that pollution from sewage, 
noise, .smog, litter, chemical waste or 
household garbage is still not difficult 
to reduce to tolerable levels. 

A river can be cleaned for less than 
£3om, or alx)ut the amount Britain 
spends on Concorde in four months, ! 
merely by building a full-treatment ' 
instead of a partial-treatment sewage 
plant. The air, and a lot else, could be . 
cleared if the official alkali inspectors 
used their very considerable legal 
powers to make industry clean its pro- 
cesses, Dr Denney complains. He is 
bitter about the inspectors and the ( 
exaggerated modesty with which they 
carry out their duties. How, he asks, . 
can you impose all sorts of sanctions on ^ 
ordinary householders (including ; 
depriving them of their coal fires) I 
when they see hourly evidence that , 
industry is allowed to get away unre- 
buked with a thousand times the [ 
filth ? According to Dr Denney, the '( 
alkali inspectors already have all the I 
powers they need, but do not use th^* 


56 


THE ECONOMIST JANUARY I5, I972 


Husnu ss I)} 


Investment ; any more carrots 7 


British businessmen are still 
- not ready to commit them- 
selves to more capital spending, 
despite the potential onslaught 
of consumer demand if Britain’s 
5% growth rate materialises. 
The Department of Trade and 
Industry’s latest survey, pub- 
lished on Monday, is glum. 
After reducing their spending 
last year by 5% in volume (not 
quite as bad as the 6-ft% 
forecast), manufacturers predict 
a further fall of about 3% this 
year. 

There will be the odd 
exception : such as tRe iron and 
steel industry, where British 
Steel’s investment programme 
> is expected to push capital 
, spending well above last year’s 
level. Some increases arc also 
expected in the coal and petro- 
leum products industry ; and in 
food, drink and tobacco. Most 
of the rest of manufacturing 
industry expects its investment 
to stagnate, at best. 

Distribution and service 
industries are a bit more optimis- 
tic. Their investment dropped 

about 2% in volume in 1971. 
They expect it to rise by about 
2% in 1972, with another 
moderate increase in 1973. 
Investment in shipping has 
bucked the trend, with a 20% 
increase last year and the pros- 
,pect of a further big rise this 
year. But a fall is forecast for 
1973. Shipping is now a boom- 
or-hust industry, mostly bust. 


bers, after a very sticky patch a 
month or two ago. Its own 
industrial trends .survey, now 
being prepared and due out in 
early February, may sound a 
bit more hopeful than the 
DTI’s offering. 

But there is little chance of 
a jump of any size in manufac- 
turing investment this year. 
Total fixed investment should do 
better. The National Institute of 
Economic and Social Research 
in December predicted a growth 
in it of just under 3^%, des- 
pite a more gloomy forecast 
for manufacturing (minus 64%) 
than the DTTs. This is mainly 
because private housing should 
take off this year, growing at a 
massive 16%. Investment in 
public industries and services is 
also due for a healthy rise. 

None of this is much help to 
an industry like mecihanical 
engineering, which cut back its 
workforce by 8% last year and 
i.s crying out for orders. It will 
need a very Jarge increase in 
demand before it adds to its 
greatly under-utilised capacity. 
Other industries, with less 
excuse, are singing the same 
tune. At Wednesday’s meeting 
of the National Economic 
Development Council there were 
warnings that British industry 
may be settling at a lower level 
of risk-taking and investment 
for some years to come. 

Under-investment 


The DTI’s quiz covers 2,000 
manufacturing establishments, 
which between them account 
for nearly two-thirds of all 
manufacturers’ capital expendi- 
ture. It usually provides reason- 
ably accurate forecasts for the 
near-term. But, for the second 
half of 1972, there is a hope 
that this time it may be too 
gloomy. The returns were filled 
in last November and December. 
Since then, the inteniational 
currency “crisis” has been 
nominally solved ; the con- 
sumer spending spree has been 
shown to have some real flesh on 
it; and confidence has much 
improved. The Confederation of 
(^British Industry is reporting 
^tter morale among its mem- 


riiis is all the more worrying 
as Britain since the war has 
consistently invested less, and 
grown l(‘ss for a given rate of 
investment, than its competitors. 
Moreover, British investment i.s 
highly cyclical. In successive 
budgets and mini-budgets chan- 
cellors have producfxi special 
incentive after incentive. But 
no one has come up with one 
that really works. Ned feels 
that, with the present low level 
of confidence, growth in con- 
sumer demand has to be pushed 
to dangerously high levels 
before it will make an impact 
on investment spending. If 
consumer demand is stimulated 
to that extent, will there be any 
re.souirces left for investment ? 


There have been calls for 
yet another round of special 
Government incentives, perhaps 
with a time limit geared to 
common market entry, to get 
the ball rolling. There is no 
guarantee these would work. 
Ned reckons that even the 
fattest carrot could prove 
utterly resistible to companies 
which still feel unsure about 
how business will develop. 

If one studies the record, it is 
difficult to ascribe particular 
movements in investment to any 
specific incentives, except in 
the very short term. When the 
rate of investment grants came 
down by 5% at the end of 1968, 
some £25m of investment was 
brought forw'ard to catch the 
tail end of the higher grants, 
with a corresponding fall in 
capital .spending at the begin- 
ning of 1969. But within three 
months investment was back to 
its pre-bunching level. 

Since the present Govern- 
ment has been in power, there 
has been a complete switch 


in method. Labour's 1966 
system of investment grants — 
40% of outlay in development 
areas, 20% elsewhere (after an 
initial two-year period of 45% 
and 25%) — was abolished in 
Mr Barber's mini-budget in 
October, 1970, on a number of 
grounds : it discriminated 

against service industries (they 
got no grants); it was admini.s- 
trativcly complex, needing 
elaborate checking procedures 
and encouraging borderline dis- 
putes where establishments 
could be classed as either 
manufacturing or service ; it 
was very much more expensive 
than the first rough estimates 
had suggested. More important, 
it gave grants to any manufac- 
turing project — ‘instead of 
giving the biggest aid to success- 
ful projects that made the 
^'Kgest profit — and it thus 
offended against Tory philo- 
sophy of helping the fittest. 

So Mr Barbel brought in a 
system of capital allowances, 
combined with a 24% cut in 


Recovery under way? Capital spending. Cmillion. 1963 prices 



500 


500 



1960 


68* 69* 70 




forecasts 

-A A _ 

72 73 


♦after allowing for expenditure brought forward to secure higher investment grants 


Industry still gets help Cmillion 




fib6i<0MiiS3t jAl^^ 1972 


BUSINESS BRIEF 


5 ^ 


corporation tax, which in the 
1971 budget was raised to 5%. 
A 60% allowance against tax 
in the first year was given 
on all expenditure on plant 
and machinery from October 
26, 1970, followed by a 

25% allowance on the reduc- 
ing balance in subsequent years. 
In the development areas f|;ee 
depreciation was introduced for 
all immobile industrial equip- 
ment (to prevent items like 
transpon equipment being 
bought on development area 
terms, then moved elsewhere). 
Last year the system was 
broadened by allowing free 
depreciation on service indus- 
try’s equipment in the develop- 
ment areas (previously this had 
only qualified for the ordinary 
60% allowance). The allowance 
for all equipment outside the 
development areas was temp- 
orarily raised from 60- 
80%, in an effort to induce busi- 
nessmen to bring investment 
forw'ard ; this runs only to the 
end of July, 1973. One further 
measure, which went relatively 
unnoticed— -although the Inland 
Revenue took the unusual step 
of advertising it in the news- 
papers — was a carry-back rule 
w'hich enabled companies to go 
back up to three years for any 
profits they wanted offset by 
the new allowances, so they 
could benefit even if they were 
not doing well in the current 
tax year 

Which helps most ? 

On paper — or at least so far 
as public expenditure figures 
go — the new system >f allow- 
ances looks less costly than the 
old grants, even allowing for 
the build-up in other services, 
such as help under the Local 
Employments Acts, which is 
given in development areas on 
condition that it produces a 
worthwhile number of new jobs 
and which is scheduled to go 
up from £52ni net in 1970- 
71 to £79m net in 1975-76. 
Investment grants, which were 
running at nearly £6oom in 
1970-71, will be gradually run 
down to £37m in 1975-76. 
The regional employment pre- 
mium, which at the moment is 
costing £io7m a year, could 
not be abolished until 1974 but 
will then go. But the cut in 
corporation tax has also cost 
the Exchequer mcwicy, in terms 
of revenue forgone, even though 
this does not show up in the 
books. The two consecutive 
2^% cuts are reckoned to cut 
revenue by around £2oom in a 


full year ; as profits pick 
up, this is likely to increase. The 
allowances and cuts arc worth 
some £i6om this year and will 
be worth about £695m in 1974- 
75. Most of this will go to 
private industry since the 
nationalised industries are rather 
short on offscttablc profits. On 
this basis, private indu.stry is 
getting at least as much sup- 
port under the Tories as under 
Labour. 

Which system docs industry 
prefer ? A survey carried out 
for DTI by the Manchester 
Business School early in 1971) 
suggested that 60 V;, of industry 
preferred allowances to grams. 
But there were divergent 
opinions. ICI, which set its tax 
department to work on dis- 
counted cash How under both 
systems, found itself better off 
with grants. In industries with 
long lead times the new system 
can mean a wait of several 
years for the allowance.*; ; they 
got ca.sh more or less on the 
nail with grants. 

No change, please 

Most of all, having swallowcu 
the new system, industry doe.s 
not want it to be changed yet 
again. Frequent changes in the 
method of support have meant 
that firms do not I cel con- 
fident in counting on these 
funds in their forward budget- 
ing. This is one reason why 
incentives are rarely a govern- 
ing factor in an inve.strneni 
decision, although their avail- 
ability does influence marginal 
projects. 

Most big companies seem 
to regard investment incentives 
more as icing on the cake than 
bread and butter. None of the 
schemes has really had time to 
prove itself. A reasonable guess 
of the time needed to sec if 
a system is effective might be 
about five years. None of them 
has been around that long. 

The present system has been 
criticised because it docs not 
discriminate enough in favour 
of the development areas ; the 
20 % difference in initial allow- 
ances between development and 
other areas is hardly going to 
sway doubtful investors. Maybe 
there will be some more carrots 
for them. Perhaps in March 
taxes on profits will be cut fur- 
ther. But at the end of the 
day Government and industry 
arc equally convinced that only 
a buoyant economy and the 
prospect of selling at a profit 
arc going to make any real dif- 
ference to capital spending. 


What the Government does for industry 


Incentive Development Special Northern 
areas development Ireland 
areas 


(1) Tax allowances: 

(a) Machinery 100% allowance on 
and capital spending on 

plant new machinery and 
plant (other than 
mobile equipment) 
for manufacturing and 
service industries ; 
60% first-year 
allowance (and 
subsequent annual 
writing-down 
allowances of 25% on 
the declining balance) 
for most other 
machinery and plant ; 
initial allowance 
raised to 807o for 
spending between 
July 20, 1971, and 
July 31, 1973 


Tax allow- 
ances on 
net 

spending 
(after any 
grants) as 
in develop- 
ment areas 


(b) Industrial 
buildings 


44 7o of the construction costs 
(less any grant) in first year ; 
thereafter, 47o. 


Other 


607o 
first-year 
allowance 
on most 
items. Then 
25 7o a year 
on declining 
balance 
Temporanly 
raised to 
807o (see 
develop- 
ment areas 
for dates) 


Intermediate 
areas : 447o ; 
other: 307o. 


(2) Grants : 
(a) Building 


(b) Operational 
(for new 
incoming 
industry 
only) 


35 7o, or 45 7o for 
certain new under- 
takings 


nil 


307o of 
eligible 
wage and 
salary cost 
during first 
three years 


(c) Machinery nil nil 

and 

equipment 


35-557o 25-357o , 

intermediate 
areas only 
Negotiable nil 
contribution 


20.407o ml 


(3) Regional employment premium : 

£1.50 a week for every male adult nil 
employee ; lower rate for other 
workers 



Who gets incentives 7 

Development Areas* 

Special Development 
Areas 

Intermediate Areas 

Northern Ireland (full 
range of incentives, 
some at higher rates) 

if Overspill towns where 
Special Development 
Area benefits are 
available 

^ New towns where 
Special Development 
Area benefits are 
available 


* includes Orkney b Shetland Islands 




58 


im ZOONOMIST JANUARY tgja 



Kobe Port 

A 12*5% growth rate. Latch on to it 
with the Hongkong Bank Group. 


The legendary Japanese 
boom is far from over. Gross 
National Product may be the 
second largest in the non- 
communist world but per 
capita income gives Japan 
only sixteenth place in the 
same league. That means 


are on the spot in Tokyo, 
Osaka, Kobe, Yokohama, 
Nagoya and have branches in 
35 other countries. Their 
knowledge of the Japanese 
scene is comprehensive and up 
to date. Now they have 


packaged the facts in a concise 
16 page economic profile of 
that country. No manufacturer 
or exporter can afford to ignore 
Japan. Send for your free copy 
of the booklet now - and get 
your briefing from experts. 


there’s still considerable 
consumer buying power to be 
generated, more exporting 
opportunities yet to emerge. 

And Japan can still surprise. 
A country of over 100 million 
people, the world’s largest 
shipbuilders, yet a country 
where 17.5‘' <', of the working 
population work in the primary 
industries of agriculture, 
fishing and forestry. 

The Hongkong Bank Group 


1HE 

HONGKONG 




THE HONGKONG BANK CROUP 

9Gb»%ctoJit:h Street,Iaidon EC3V(XU 





THE BOONOMXST JANIMRY I5, 197a 


59 


BUSINESS 


Hullo, Europe! 

Britain's entiy into Europe is a momentous historical event, and deserves a 
real celebration. But what kind of party should we throw ? 


Britain’s entry into Eurqie in 1973 should not be allowed 
to pass by as a mere ^torical footnote. That is what 
it threatens to be, unless we can organise a decent cele- 
bration which will remind everyone from the leaders of 
industry to the man on the Chelsea terraces that, 
after all the talk, Britain really has joined the European 
Economic Community. At the same time it should do 
something to warm people to the ideal of Europe, which 
the Government so far has singularly failed to do. 

This celebration should not take the form of a political 
fandango, which would only bore people. It should be 
a show that everybody can enjoy. Above all, it should 
be fun. So what should it be ? 

There could be a grand parade through London, a 
kind of beefed-up Lord-Mayor’s Show. There could be a 
nationwide arts festival, with performances around the 
country by leading Britirii and European orchestras, 
theatre, ballet and opera companies. (Perhaps including 
works specially commissioned, including, to please the 
Prime Minister, a symphony.) There could be a public 
holiday declared, complete with firework displays. A 
monument could be put up. Or there could be a 
national exhibition. 

An exhibition seems the ticket because British people 


enjoy exhibitions and rather fancy their ability to 
organise them. The last big one, the Festival of Britain 
in 1951, was said to be doomed to disa.stcr but turned 
out a roaring success. As much as anything, it per- 
suaded the country that the war really was over and life 
was there to be enjoyed. Something of the same is 
needed for Britain-in-Europe. 

The exhibition could be purely commercial and 
industrial. But this would probably not be a success 
because it would only be able to display a few select 
products from each industry, and so would not attract 
professional European buyers, who only travel to 
specialised exhibitions of the kind that fill Earls Court 
and Olympia the year round. Secondly, such an exhibi- 
tion would not bring the British public flocking to its 
doors in its millions. So the industrial display should 
be a part of a wider exhibition, which should 
develop a broader theme, embracing everything from 
painting qnd sculpture to food and sport. If the idea is 
attractive, the obvious question is ; what are the practical 
snags ? 

There are three : site, money and time. The site could 
conceivably be in Europe itself. This would mean that 
more Europeans, including potential customers, would 


Where could you put an exhibition? 


Estimated acreage that could be freed 



HAY'S WHARF 

(25 acres) 

BMER COVENT \ 

OXFORD OAROEN \ 

^ QRCUS (lOaeras) \ 

PICCRddlV W^??^*** 1 

HYO-EeW m‘360ac,^) 

(200 acres) 

' nPESTIVAt OF BRITAIN 
.„„^USITEU95I’-10 acres) 

VICTOfllA 




CRYSTAL PALACE 

(75 acres) 

PENQEWm 




6o 


BUSINESS 


THE ECONOMIST JANUAkV 15 , 1^73 


go to find out what the British really are like. A central 
site in, say, Brussels would also be easier to get than one 
in London. But very few Britons would then go, except 
the jet set. It would also be marginally more expensive. 

So a British site it ought to be. The right choice is 
l^ndon. There are arguments for trying to break with 
habit and give the provinces a share of the action, 
especially since Londoners already seem to be more pro- 
European than the rest of the country. For one thing, 
since the exhibition will provide several thousand jobs 
in setting it up and running it, it could help Scotland 
or Wales. Glasgow ran a successful Empire Exhibition 
in 1938. But, as any professional exhibition organiser 
knows, London is the place for the biggest attendance. 
And London is where the tourists come. To hold it out 
of London would make the net cost too high. 

So what Lxindon site should be chosen ? The map 
picks out 10 possible starters. The central London sites 
are all attractive, but there arc major practical prob- 
lems with each. Hay’s Wharf, by the river, could be 
cleared in time but the area would be too small. Covent 
Garden is also scheduled for redevelopment, but it would 
be hard to move the food market in time, and it would 
also be too small. Battetsea Park lacks large areas of open 
ground. Both the Surrey and London docks arc large 
enough and readily available: with imaginative use of 
the river, a good show could be mounted in either. But 
there would be two drawbacks. First, dockland is still 
pretty Dickensian, and not the ideal symbol of tomor- 
row’s Britain (although with the development of the 
new World Trade Centre complex at St Katharine’s 
Docks upstream, this could change rapidly). Second, it 
would be foolish to spend money on demolition and 
development for the exhibition until the future of the 
docks had been agreed on (so that money would not 
be spent twice over), and agreement is unlikely to 
happen before late 1973. 

Hyde Park is the best central London site, and it 
was, of course, where Prince Albert’s Great (and profit- 
able) Exhibition of 1851 was held with the help of the 
new railways and which told the new middle-class 
Victorians that they really were on top of the world. 
There are 300 open acres in the park and it is 
ezisily accessible. Against it, however, are the likelihood 
that it would cau.se appalling traffic congestion and the 
park might be badly churned up. 

Farther out of London the number of sites quickly 
multiplies. Of the four on the map, Northolt looks best, 
with Crystal Palace a close second. The advantages of 
the Crystal Palace site are that the land is owned by 
the Greater London Council and could be easily used, 
and many outdoor exhibitions have been held there in 
the past. However, it is neither as large nor as accessible 
as Northolt. The buses from the airport and cars from, 
the M4 could trundle straight to Northolt, and would 
find space enough for parking. What is more, the GLC, 
after looking at over 40 sites, decided last year that 
Northolt wa.s the best po.ssiblc one for the long-awaited 
London exhibition centre to replace Olympia and Earls 
Court. If the centre is to be built at Northolt, there 
would be obvious economies to be had from holding the 


Hare^ a aita 


Shaded area provides 
140 acres. This is the 
GLCs choice for a 
permanent exhibition 
site. Taking over the 
RAF buildings and the 
airfield itself would offer 
" Hullo. Europe I" a 
further 200 acres. Road 
and rail links are excel- 
lent although access 
roads could be a 
problem 


“ Hullo, Europe ! ” show there. Money spent on improv- 
ing access roads, power supplies and drainage would 
lower the eventual cost of building the permanent 
centre. The problem is that planning permission for 
the centre has not yet been granted, and the contractors 
will not buy the land until it is. The planning inquiry 
is not due to start until May, and usually it takes 
months before a decision is taken. So if Northolt is to 
be the site the Government would have to put a charge 
of dynamite behind everybody. 

The exhibition should open in March-April, 1973, and 
run through the summer. That only leaves 15 months 
from now. Civil servants and professional fair organisers 
will say it cannot be done in time. But that is mainly 
because it usually takes months fur Whitehall to reach 
such decisions. If the business is left to the usual channels 
it will indeed be too late. But if .someone at the top takes 
the initiative quickly, of course it could be done. The 
most recent exhibition in Britain was Ulster ’7 1 in Belfast, 
which cost £835,000. Although utter failure was forecast 
by the press it was visited by half of Ulster’s population. 
Planning for it began only 16 months before it opened. 

The third question is the cash. Ideally, the exhibition 
would be self-financing, but some subsidy will probably 
be required. The Festival of Britain in 1951 cost 
£ii^m (or £23m at current prices). “Hullo, 
Europe ! ” .should not be nearly so costly. The budget 
could be even as small as about £3m. This would 
cover construction of 500,000 square feet of covered 
space (mainly tented) plus services, car parks for up to 
10,000 cars and other infrastructure. More would buy 
more, and the exhibition should be an opportunity 
to put on show every conceivable kind of modern tempor- 
ary construction. Industry would pay for the cost of its 
exhibits plus a rent for the space. Other concessions, plus 
parking fees and gate money, should easily cover nmning 
costs. The Government could afford to put its hand in its 
pocket for such an occasion. After all £301 is spent 
every fortnight to keep Concorde going. The cost of the 
festival could be even lower if industry’s enthusiasm can 
be fired. If Lord Stokes is prepared to spend £45,000 on 
advertising the merits of British entry into Europe, he and 
other industrialists might put a bit into “ Hullo Europe ! ” 
It could very easily sell more British Leyland can than 
those advertisements did. 

To set the ball rolling, someone needs to take a lead. 




THB BGONOMIST JANUARY IS, igjS 


BUS1NBS8 


6l 


Prince Philip could do no better than to follow Prince 
Albert’s example. In 1849 Prince Albert pushed the 
Board of Trade into blacking his idea. The money was 
raised in no time at all, and the exhibition opened in 
May, 1851. Over 6m people visited it and it made 
a handsome bonus. And should not the exceptional 
talents of Lord Eccles be pressed into service ? From the 
man who gave you the Coronation nothing less than a 
box-office hit would be conceivable. The exhibition could 
take umpteen forms, but here is one scenario : 

There would be five main areas. The first would be 
an industrial pavilion, with exhibits from private and 
nationalised industries. The emphasis would be on British 
industry in the 1980s. Typical exhibits might be a 
computer playing chess, a display on oil discoveries 
in the North Sea, the next generation of cars, a jump 
jet and an operating whisky still. 

The second would be a pavilion on everyday life : 
homes, roads, a model railway layout of Europe’s rail- 
ways in the 1980s, complete with Channel tunnel. To 
balance Lord Stokes, a prototype advanced passenger 
train. There would be mock-ups of a fully-automated 
classroom and ho^ital ward. 

The third would be cultural, and trace the links and 
interrelated influence of European and British art, with 
paintings and sculpture on loan from European galleries. 
There would be un peu d’histoire, of course : a section 


on the development of the ideal of uniting Europe 
(avoiding such nasty people as Napoleon and Hitler). 
There would naturally be a section on sport in Europe, 
explaining British superiority where it really counts. 

The fourth and fifth would be more light-hearted. The 
fourth would, best of all, be a large circle of restaurants 
and bars allowing full indulgence in all the gastronomic 
delights of Europe. The fifth would be a cosmopolitan 
funfair and hurdygurdy land. Mr Geoffrey Rippon, the 
Minister for Europe, would have another star role. If he 
did, indeed, prise the subsidy out of Mr Barber he could 
be allowed a consultancy on Belgian taste and culture. 

Of course, there will be shouts of protest from a 
gallimaufry of cynics and pedants. We will be told it 
will be a flop, that it can’t be done in the time and 
that public money should not be spent to back a 
politically controvernal policy. But it Is time people 
realised that Parliament has taken the decision to join 
Europe, and that we are going in at the beginning of 
1973. If all the critics haven’t realised this, all the more 
nerf for the exhibition to remind them. This is the way 
that the last thousand years of Britain’s history should 
end, and the next thousand begin : not with an anony- 
mous slinking by two pin-striped new British commis- 
.sioners through a side door in the Berlaymonl building 
at 9 am next January 1st, but with celebration swelling 
through the land. 


Bang go some more moon theories 

The more data scientists get from their moon technology, 
the more like the earth their moon begins to look 


Before men landed on the moon the text books said it 
was a dead lump of rock. When the first rock samples 
and seismograph readings showed that this was obviously 
wrong, the description was changed to one of a ball 
filled with loose rubble. But in the past 2| years four 
separate teams of astronauts have brought back nearly 
a quarter of a ton of moon soil and rock from four 
different ntes luid left instruments and seismographs 
behind at each one. And the accumulated evidence, 
which is now being discussed at a meeting of scientists 
at Houston, the third of its kind since the moon landings 
started, is ^t the moon is neither solid nor is it rubble 
right through, but is built up in layers like the earth. 

There is evidence now, most of it relatively recent, 
of a thin crust on the surface with a relatively plastic 
mantle underneath, and then solid rock that extends 
to 500 miles beneath the surface. Under that remains 
a mystery. There is some flimsy evidence pointing to the 
possibility of a tiny liquid core like the earth’s, about 
which no scientist would risk his reputation at the moment. 
But what they are saying without fear of contradiction is 
that readings coming from the seismographs would, if 
they occun^ on eai^, be accepted as incontrovertible 
proof of the presence of active volcanoes. 

Much hangs on this ; volcanoes mean heat and they 


also mean steam and water. And where these exist 
then, however hard they are to get, so could man. 
There have been other pointers to the presence of 
volcanoes besides the seismographs and their record of 
stresses being built up and suddenly released within the 
moon. Major A 1 Worden brought back photographs 
from the Apollo 15 nusaon in August of the cinder- 
ringed cones of relatively recent volcanoes. There have 
been traces of water vapour in the rock samples ; much 
more of it than had been expected. Puffs of gas have 
been released from the moon’s crust. 

There arc still a few who refuse to accept evidence of 
volcanoes on the moon now. But they are an increasingly 
isolated minority. The same distressing scene was 
repeated in Houston on Tuesday that took place during 
the first conference on moon rocks two years earlier, 
when the reacted Dr Thomas Gold tried to defend his 
belief that the moon was dead and cold, only to be 
shouted down by men barely out of university who had 
the advantage over him of actually having handled moon 
rocks. Two years on. Dr Gold is still fighting for his 
theories, and being shouted down — ^but with diminishing 
relict 

There are other ways of explaining the heat of the 
moon. Radioactivity trapped in the rocks at the lime 



63 


ilUSINESS 


THE ECONOMfSt JANuiutV ' 15 , 1473 


they were formed Ls one of them, and probably accounts 
for a good deal of the moon’s surprising heat flow now, 
which is more than twice that of the earth. But it is 
harder to explain away the evidence of fresh cinder 
cones, of the violent internal stresses and the trapped 
water vapour. And all of this means, among other things, 
that the more the moon begins to look like, a baby earth, 
the easier it should become to develop it as if it 
were precisely that, a newly discovered, unpopulated, 
undeveloped continent three days’ flying time away with 
'resources and land waiting. 

The next moon flight, of Apollo i6, has been post- 
poned for a month until April ; a good many sc.ienti.sts 
have been prepared to forecast that it would be the 
last. There is an Apollo 17 landing on the timetable but 
it has several times seemed clo.se to cancellation. Last 
weekend, there was some indication of a reprieve ; officials 
of the National Aeronautics and Space Administration 
began to pass the word that Apollo 17 would go ahead. 
But after it the Americans cannot return to the moon 
until they have got their space shuttle to work first.' 
The shuttle programme did not get the official go-ahead 
until last weekend and it could be 10-20 years before 
Americans land on the moon again. 

There is enough mo(»n rock in the world’s laboratories 
to keep scientists occupied well into 1976 ; they are, 
after all, only talking now about preliminary and super- 
ficial findings. They are only just beginning to clas.sify 
the rocks out of which the moon Is made up and to realise 
that there is at least one group for which they have no 
specimens at all. They have the melted residues, 
re-solidified into glass fragments, but no example of the 
real thing. It will take years to sort out the curious 
specimens that came back, particularly from the last 
Apollo 15 mission to Hadley Rillc, some of which have 
not been found anywhere else. There were green rocks, 
some composed almost entirely of small green .spheres ; 
there were black and white rocks ; and there was at Iciist 
one big specimen that looked as if it had been dipped 
into a vat of molten glass, smoothly coated all round. 
Only 6 lb of the 170 lb brought back by Apollo 15 has 
yet been allocated to scientists so the stock in hand is 
huge, and, at ihis particular moment, there is far more 
moon rock than anyone knows how to use. 

Now that scientists have dated the moon, more or 
le.ss to their own .satisfaction, as around 4.6 billion years 
old, their interest is switching back to the .search for 
the really young parts of the moon. The first half billion 

The moon's in layers too 

Crutt EARTH 


years of its life the moon spent being bombarded with 
meteors that blasted huge craters in its surface. This was 
followed by a period when floods of lava poured over 
the surface and filled many of tho.se craters in again. 
Apollo 1 1 landed in such an area, flooded with lava 
around 3.6 billion years ago ; two of the other Apollo 
sites and the place where the Russians’ Luna 16 landed 
were flooded more recently, around 3.25 billion years 
ago. But Cone Crater, near the Apollo 14 landing site, 
is only 20 million years old, indicating that a lot of large 
objects were still flying around the moon in — geologically 
— relatively recent times. Young sites and young craters 
have suddenly become as interesting as very old ones. 

If the Americans do not get to such places in cither 
Apollo 16 or Apollo 17, they will have to rely on the 
Russians and their Lunokhods for all future data on 
the moon. Three Russians are reading papers at Houston 
saying how precisely the chemical analysis from the 
few ounces of Luna 16 moon dust and their readings 
from Lunokhod match up with those of the Americans. 
To the Americans, this is comforting for it does mean 
that when the Russians are the only ones exploring the 
moon their data can be relied upon. But the data 
that can be collected in this way is miserably small. 

Not much had been heard from the Mars probes 
while the dust storms continued to black out their 
cameras, but as the dust subsides pictures arc starting 
to come back showing chasms 1,000 miles long cutting 
through the surface like the rilles on the moon and 
suggesting that the old astronomers who talked about 
canals might have been .seeing something real. The 
Russians openly admit that when they landed their 
package of instruments on Mars in I>cembcr, they 
were intending to look for traces of life. Some scientists 
arc still trying to do this on the moon, but seem as far 
as ever from finding any evidence of the basic building 
blocks of proteins, and there has been some grumbling 
at Houston this week about the amount of rocks they 
were consuming in apparently fruitless experiments. 

Although the Russians have not said so, the likelihood 
is that the rockets fitted to their Mars package to cu.shion 
its fall blew a hollow in the dusty surface of the planet, 
into which the package sank and was silenced. American 
experiments in preparation for, landing an American 
package in 1975 sugge.st that a normal engine as.scmbly 
would dig something like a three-foot hole in the dust, 
which would be enough to bury most apparatus. .Scientists 
forecast once this would happen to men on the moon. 





tHE EC 0 N 6 MIET jANUAEY I5, 1972 


63 


Your hotel receptionist may not 
know much about foreign trade*. 



but she could tell you the way to 

THE CHARTERED BANK^ 


Our branches in Hong Kong are as much a part of the city as the familiar 
vStar ferryboats, such a common sight in the harbour, or the colony's Londoiv 

style double-decker buses. 

The Chartered Bank including its subsidiaries and associates has branches 
throughout the Middle East, Asia, Europe and America and forms the largest 
British banking group in the East. 

Each office is a local yet international bank, offering tourists the full range 
of financial services and businessmen an unrivalled source of information 
covering export and investment opportunities abroad. 

Our Trade Promotion Department specialises in services to the exporter 
and can be contacted at any of our branches in London, Manchester or Liverpool. 


The (Shartoied Bank 


Head Office: 38 Bishopsgate, London, EC2N 4AH 


A MEMBER OF STANDARD AND CHARTERED BANKING GROUP LIMITED 




64 


THE ECONOMIST JANUARY 1 5 , I 973 



Think Bank 


When it comes to 
banking and business 
on an international scale, 
Sanwa thinks enough about you 
to think differently about you. 
Alter all, your problems are 
dilferent from anyone else's. 
And different problems 
mean different answers. 
That's exac tly what you 
get at Sanwa. 

Which is something you should 
think about. 


^ SANWA BANK 

Head Office; Fushirni-indchi, Higjshi-ku, Osaka 
Caf)l(' ^(Jc^r(^ss: SANWABANK OSAKA 
Tokyo Office: M-1, f1it<'tsubcishi, Chiyoda'ku, Tokyo 
Ccihlr Addri'ss SANWABANK TOKYO 
New York Agency: 1 C base Manhattan Plaza, New York 
London Branch: 45, Gr^'sham Street, london f.C.2 
San Francisco Branch: ,KX) Montgomery Street, San Francisco 
Hong Kong Branch; 20, Des Voeux Road, Hong Kong 
Frankfurt Representative Office: (>()0() Frarikfurt/Main, 
C'loethe Strasse 22 

Sydney Representative Office: Austral iri Square, Sydney 
Singapore Representative Office; .>5-36, Phillip Street, Singapore 1 


%rth Britisli 
Properties 
sees accelerating 

growth’ (Financial Times 17th Oecember 1971 ) 


Profit before tax £1 A 02,01 2 £1 ,025,567 

Profit after tax 650,911 580,043 

Property values 7,033,717 3,387,658 

Investment income 401,559 329,487 

Building profits 1,069,317 968,059 

Dividend 24% 22% 


Graph of growth in profits 
before tax since 1962. 



and still further 
expansion 

Our report for the year ended July 31 st 1971 includes a 
supplement covering 10 year} of growth. We talk about 
office and shopping developments; United Kingdom 
and Overseas housing developments, and other activities 
including shopfitting and newsagents. Since the report 
was published we have acquired Harold Dawson 
Properties Ltd., a Teesside based investment company 
and also created a Midlands building company. We are 
confident of accelerating growth. 

A copy of the Report and Accounts can be obtained from 
the Secretary 



North British Properties Limited 

Dobson House, Regent Centre, Gosforth 
Newcastle upon Tyne NE3 3LT. 


MioeaKiumt jmitiaev 13, 1^79 


BUSINESS 


63 


Queue up here for help 

The EEC has overhauled its social fund for helping the unemployed. If Mr 
Robert Carr plays his cards right Britain could do very well from it 


The revamped European Social Fund kicked off on 
January ist with a grandiose vision and a meagre budget. 
Its aim is to cushion redundancy and reduce unemploy- 
ment. It replaces the original fund, set up by the Treaty 
of Rome in 1958, which in its time had paid out $i5um 
to 1,3m workers in 10 years, but to no great effect. 
All it did was to repay half the costs of various retrain- 
ing schemes set up by national governments, generally 
two years after the event. 

No wonder the Italians, rather grumpily, in a 
memorandum on social policy put to the council of 
ministers last July, described the old fund as having 
only a “ marginal and negligible ” effect. Italy has far 
higher unemployment than any other of the Six, but 
its memo did not go down at all well. It contained 
several home truths that were not appreciated in 
Brussels : all on the theme that the Commission talked 
a lot but never actually did anything. But the Italians 
too, are prone to be long of wind and short of ideas. 

The old social fund should chiefly have helped the 
south of Italy, but the Italians drew no more money 
out of it than the Germans. The reason was that the 
fund cannot help unless individual governments produce 
schemes for it to finance. The Germans, efficient as ever, 
produced dozens at the drop of a hat. The Italians, 
with a real problem, were slow off the mark. There 
is a lesson here for Britain. The depressed areas could 
draw a great deal from the new social fund provided 
that the Department of Employment prepares suitable 
schemes now for submission after we join. 

The Irish government is well up with the game. It 
submitted a memorandum on social policy to the 
council at the same time as the Italians. This went down 
well. It was constructive and not too didactic. If the 
new social fund really gets off the ground, Ireland 
should be one of the big gainere, with its current 8 per 
cent unemployment rate, Britain, and particularly 
Scotland, should not be far "behind. But that is very 
much up to us. 

The new fund is intended to work in three ways : 

(a) It will help workers wiho lose their jobs because of 
some particular EEC policy ; paying to retrain them, 
resettle them if need be, and supplement their income in 
the meanwhile. 

(b) It will also help retraining and rc.settlcment in 
depressed areas where unemployment is high. 

(c) It will try to develop a pool of skilled labour for 
expanding new industries. The Eurocrats have tagged 
this a policy of “ social promotion,” since it means 
encouraging men who are not necessarily out of work to 
retrain for a better job. 

Germany and the developed industrial regions arc likely 
to get proportionally more from (c), w'hich is at least 
parUy intended to reconcile them to the fact that they 
will get precious Kttlc from (a) and (b). 

The other novelty in the iWormed fund is that instead 


of paying up long sifter the event the fund can now 
be .swung into action before redundancic.s fjccur. A 
possible problem is that it cannot be used in major new 
ways without these first being cleared by the council 
of ministers, never a quick or ea.sy process. It has taken 
six years of talk to get the council to agree to ndorm 
the fund itself. The effectiveness of the fund may depend 
in the end on how much pressure Britain and the other 
new members exert in the council. 

The total budget for the fund this year is likely to 
be no more than $5f>m, although the Europcai. parliament 
has pres.sed for .$6om. This is peanuts, but the I'.utocrats 
insist that the fund is starting off on such a small scale 
becau.se it has not yet got adequate staff to get down to 
business. They expect the budget will top $30om within a 
few years, and it probably will. 

The belief is that it will be able to apply to declining 
industries the techniques pioneered .so succe.ssfully by 
the European Coal and Steel Community. The ECSC 
has done a superb job running down the mines. Without 
action on the European scale, the mines could never 
have been closed so fast with so little distress. The 
number of men in the Belgian pits around Mons was 
halved in two years, while the ECSC paid a grant of 
£200 to each miner put out of work and lopped up 
his unemployment pay if he remained unemployed. The 
ECSC also made grants for the kind of development 
needed to attract new industry. With the help of the 
fund, textiles, shipbuilding and other declining industries 
may now be run down in the same way. 

The EEC reckons that the pace of industrial change 
will be such that 1 worker in 10 is hkely to lose his job 
in the next 10 years. As it is, 2m jobs have dis- 
appeared in mining and manufacturing in" the EEC 
during the past 12 years. Last year’s sharp upturn in 
redundancies and unemployment in Britain is not a 
purely temporary phenomenon but had a good deal 
to do with the permanent shaking-out of labour, so the 
I in 10 figure could be even higher for us. 

At first the Briti.sh Government w'ill only try to claim 
cash from the social fund to help finance existing national 
schemes for training, helping the disabled and so forth. 
But what It needs to do is turn its mind to dreaming up 
new schemes for particular regions and industries. This 
would be a major departure from traditional British 
policy but would qualify for a big cash injection from 
the fund. 

With the fund only weeks old the EEC’s employment 
policy looks very fluid. It can easily be influenced one 
way or the other by intelligent discussion in Brussels. 
Britain could be one of the main beneficiaries ; but the 
Government and the British unions will first have to 
accept tliat the fund’s money is not available for propping 
up declining industries, only for decendy burying them. 



66 


THS BCOMOIOST IANUARV 15, I978 


BUSINESS 


Britain 


The miners have to cool it 



After the forty got through one picket had a broken leg 


After picketing of coal stockyards 
began to get ugly on Wednesday and 
one miner in Yorkshire who tried to 
stop a lorry from collecting coal ended 
the day in hospital, Labour asked for 
an emergency Commons debate on the 
strike, which will take place next Tues- 
day. By then the strike wiU have 
settled into grooves along w'hich it is 
likely to run for several weeks. More 
to the point, the Naitaonal Union of 
Mineworkers sent the word round 
privately to its members on Thursday 
to cool it. 

The strike, the union’s first for 46 
years, is not going quite as its executive 
would like. For a start, it did not expect 
that miners at half the pits would 
refuse to keep up essential safety ser- 
vices ; their refusal demonstrated 
depths of bitterness against the 

The wage queue 


National Coal Board but it is not the 
picture that tlie NUM is anxious to 
present any more than it wants its 
members to be seen n>ughing«up unco- 
operative lorry drivers. The anger with 
which they chased away television and 
radio reporters suggests the men are not 
too keen to be seen doing it either. 

Plans are going ahe^ to improve 
both the organisation and the discipline 
of the pickets by bringing miners down 
from the Midlands to picket key power 
stations in London and the home coun- 
ties, but the Central Electricity Gen- 
erating Board already has 12m tons 
of coal in stockyards inside the plant 
gates. Efforts will be made to stop the 
men inside the power stations from 
handling this coal, but they are un'Kkely 
to get far. The CEGB has a further 
500,000 tons in ^re in Rotterdam, the 


last of 4m tons imported from Austra- 
lia and the United States last winter 
as a precaution against a possible coal 
shortage. This has been unloaded from 
bulk carriers too large to berth near 
the power stations, and is waiting trans- 
fer to smaller ships. The NUM will 
try to get other uiiions to black this 
coal, but it has had precious little 
support so far either from the Trades 
Union Congress or from the big trans- 
port unions to whom it was looking for 
help to make the strike bite. 

The miners are unlikely to go back 
to work until they have run out of 
cash and credit with local tradesmen, 
which could take some weeks. As 
wages are paid a week in arrears, they 
were all due to draw full pay this 
Friday, and there are rebates of 
income tax to draw after that. Some 
miners were put out that the coal board 
has stopped their concessionary coal. 
The board’s chairman, Mr Derek Ezra, 
made another appeal to the union on 
Thursday — which was rejected — to 
take the strike to the industry’s own 
special arbitration tribunal, but more 
because he wanted to look dove-like 
than because he was sucing for i^ce. 
Tlie Government would be worried if 
Mr Ezra did increase his last offer, 
which was equivalent to a rise of 12 
per cent. This is the season for wage 
claims and nearly 5m other workers 
with claims in the pipeline are waiting 
to see how the miners do. 

Cars 

Striketime again 

The 1972 oar strike season has got off 
to an early start, vnth factories stopped 
on both Merseyside and Oydeside. On 
Tuesday, five days after British Ley- 
land had introduced its too mph 
Triumph Dolomite, its production yras 
riiut down because two men at Tri- 
umph’s Liverpool factory refused to 
make up a work team depleted by 
absenteeism. Absenteeism at Triuinph 
in Liverpool is so high that ffie unions 
had that men must be ready 

to switch j<^ to keep the plant run: 
lung. Despite this, 650 men %valked 
out in unofficial strike suid by Wednes- 



Number 

Claim 


OOOs 

% 

En^neers 

^500 

40 

Builders 

800 

70 

Teectiers 

350 

14 

Railwaymen 

300 

15 

Postmen 

200 

5 

Printers 

180 

32 



Number 

Claim 


OOOs 

7. 

Becitricity 

120 

15 

Gas 

60 

12 

Dockers 

47 

na 

Water 

27 

15-20 

London buses 

23 

15 

Chrysler 

6 

20 



im toamum pa^AKt 15, *^79 


BtrStNBSS : BRITAIN 


67 


day 4,600 woriceis 'were laid off in both 
Liverpool and Coventry. By Thursday, 
Rover was the only Leyland car plant 
still working normally. 

Leyland’s Jaguar car production and 
its Scottish truck plant at Bathgate 
had already been closed by labour 
trouble. The Bathgate men went £7 a 
week more to get on terms with 
workers in England. And Leyland is 
not alone. Some 6,500 Chrysler car 
workers at Linwood, near Glasgow, 
stopped work on Friday last week ^ter 
a demand for £8 more a week had 
been countered with offers of £3 a 
week without productivity conditions 
or £4 with strings. Chr^er’s offers 
were based on the 8 per cent, or £3 a 
week, rise which the workers at its 
Coventry factories accepted last year. 
Either would halve the present £8 a 
week gap between the haghHproducti- 
vity English men and the much less 
productive Scottirii ones. The £4 
would make Chrysler’s men the 
highest-'paid workers in Scotland with 
£36 a week for production-line men 
and £44 for several hundreds operat- 
ing round<the-clock shifts in the press 
shop. There are now 18,000 car workers 
either on strike or laid off because of 
strikes. 


Economy 


Something's 
coming right 


With the greatest of ease, December’s 
figures weighed in on Thursday to 
finish the best-ever year for Britain’s 
overseas trade. The .curplus, the eighth 
in the year, was as much as £36m, 
and for 1971 as a whole was £295m. 
When earnings on invisibles, still over 
£5om a mondt, are included the year’s 
surplus on current account was in 
excess of £90om, well outstripping 
ig7o’s £5 79m, when the virible balance 
alone was a bare £7m. It is true that 
the volume of British exports in ithe 
fourth quarter of 1971 was a little 
lower than in the third quarter, but 
this could be attributed, in part, to 
the American dock strike and tem- 


porary surchaige on imports. Nobody 
is looking for trouble anyway. 

At home the latest retail trade figures 
seemed disappointing at first glance, for 
they showed a slackening in business 
in November. But riiojykeepers had a 
fantastically good time in October and 
they could not hope for a repest so 
soon. It was bullish enough that in 
the two months hoppers bmght at a 
rate about 3 per cent above the pre- 
July level, in real terms ; and although 


much of that increase was concentrated 
on durable goods, nearly all sides of 
the business, even the fo^ trade, had 
benefited to some extent. Moreover, the 
shops take less than half of consumers’ 
money and all the indications are that 
spending on cars and services is going 
on merrily. Indeed, die Treasury, in 
its latest mondily assessment on Thurs- 
day, says that the signs suggest a further 
substantial increase in consumer spend- 
ing in the final quarter of 1971. By 
November letail prices, excluding those 
for seasonal foods, were rising at an 
annual rate of only 6J per cent com- 
pared with 1 1 per cent in the summer 
months. The Treasury attributes this 
success to the cuts in purchase tax and 
halving in Set — and, grudgingly, 
probably also to the CBI’s price 
restraint initiative. 

Revisions in the national income 
statistics (which are becoming pretty 
maddening) now indicate that people 
have not been stuffing as much 
money under their mattresses as 
had been thought ; it now seems 
that even in &e first quarter of 
1971 they saved no more than 
8.1 per cent their disposable 
income, while in the following six 
months the rate came down to about 
6J per cent. Despite this, the slowdown 
in consumer prices ds confirmed and a 
further steadying in wholesale prices 
was revealed this week. 

As more British companies see more 
profits coming through, it must be 
hoped they will 'be induced >to step up 
their fixed investment plans which are 
still pathetically low (see page 56). This 
is the dismal side of the picture, 
although ithe Treasury is always quick 
>to point out <that it planned a con- 
sumer-ded boom, with litde hopes of 
investment improving until towards the 
end of this year. But being right on 
that should not give it much comfort. 

Jied 

Tasks ahead 

Ibe National Economic Development 
Office is to set up a new medium-term 
review — covering the period I97***77 — 
of the effect of entry into Eun^ on 
key Britirir industries. The council 
started discussing the idea more than 
a year ago, but could not go ahead 
until the Commons voted for entry. 

A provisional list of industries most 
affected includes meohanical and elec- 
trical engineering, electronics, steel, 
motor vehicles, chemicals, textiles, 
agriculture and food, and paper and 
board ; these industries make up Just 


over a quarter of Britain’s gross national 
product and 30 per cent of industrial 
production. The first part of the review, 
which will set out present problems 
in these industries, should be ready by 
midsummer ; the rest of the exercise, 
outlining prospective problems and 
proposing solutions, should be com- 
pleted by the end of the year. 

Ned is well aware that this kind 
of project will bring back memories 
of earlier planning efforts — the ill-fated 
1963 national plan and the wordy 1969 
green paper “ The Task Ahead.” This 
time round, Ned is going to be more 
cautious still : there will be no attempt 
to set up targets, but more attention 
to the effect of international factors 
on British business. 

Traoel 

Gullick rerouted 

Boardroom changes at Clarksons Holi- 
days, .the Shipping Industries Holdings 
subsidiary, came on Wednesday after 
a fa;irly rough year for the company in 
which more holidays went wrong tiian 
Clarksons’ publicity could cope with, 
'rhere was a string of mini-dramas 
about uniinished Spanish hotels last 
summer, and several cruises have been 
cancelled or rearranged at very short 
notice -this winter. None of this has 
done any good to Clarksons’ image as 
Britain’s biggest tour operator (carry- 
ing 700,000 people last year). There is 
a strong possibility that the low-low 
price policy which helped to anake it 
big may need to t>e revised. 

The past six months have already 
seen a considerable internal tighten- 
>ing*up, and this can be expected to go 
further under the new management. 
I'he new oliairman is Sir Ian Scott, a 
full-time successor to RoHs-'Royce’s Mr 
Ian Morrow who has been doing the 
job part-time for the past year (he 
holds 38 other directorships). The new 
managing director and deputy chair- 
man is Mr John Straw, a professional 
said to be capable of turning his hand 
to the running of any company. He 
replaces Mr Ibm Gullick, the engin- 
eer of Clarkson’s growth, whose expert 
knowledge will be used as vice-chair*^ 
man in charge of planning. 

No piece of 
the action 

'The English Tourist board is expecting 
its funds from the Government for 
tourist projects in the develcqxnent 
Continued on page 70 



68 


tHB BaMOmST JAlWAftY I 5 , 1^79 


\bur financial dealii^ are intemationaL 

Is your broker? 


MERRILL LYNCH INVITES YOU TO 
CONSIDER THREE CRITERIA 

>k 

Being a good broker who has an international office 
or department is not necessarily the sam(. as being a good 
international broker. And, as the stresses and complexities 
of international dealing increase, you may find that you 
need even rnon* than that. You need to d(ial with one fully- 
rounded financial house, whi('h can, within the same 
organization, serve your international needs in brokenige, 
investment banking, .securities research, sale and leaseback 
financing, economic (ounselling, and even mergers and 
ac(]nisitions. 

From any financial house you seek three virtues : 

1 . STRENGTH. It miist offer stability in these testing 
times, and it must be strong enough to be objective. 

2. COMPETENCE. Clearly, if must be able to execute 
your orders efficiently and keep you properly up-to-date 
with the record of your dealings. And it must be able to 
meet your requests for information with intelligence and 
accuracy. 

3. INVENTIVENESS. It must accept changes in 
trading conditions- -indeed, it should welcome innovation. 
You want to feel, too, that it is your closest ally in 
financial problem-solving. 

Here we examine briefly the strength, competence 
and inventiveness of Merrill Lynch as an international 
investment firm. 

THE INTERNATIONAL STRENGTH OF 
MERRILL LYNCH 

Merrill Lynch is one of the biggest brokers in 
T£iiro])e. And it is getting bigger. In 1970 -a poor year for 
must brokers on the international scene— Merrill Lynch 
opened offi''es in Munich, Dusseldorf and Buenos Aires. 
Merrill Lynch participates in the majority of Eurobond 
offerings, and is n major dealer in the Eurodollar after- 
market. 

So much for size. Does it mean strength? That’s a 
good question. Shec'r size is only useful to you as an 
investor when it is mobili/ed to serve your needs; then it 
becomes strength. 

Seeing that size means .strength is a constant pre- 
occupation thr^mghoLil Merrill Lynch. The problem is 
attacked in two ways — whit h may appear contradictory 
until you think about them. 

1 . Strong central management of all Merrill Lynch 


activities throughout the world. This is seen particularly 
in the selection, training and conduct of employees. 

Your Merrill Lynch executive has come through a 
process which .selects only one executive applicant in ten 
even to begin training. He has been formally trained to 
follow the highest standards of the industry, normally in 
New York. 

Like everyone else in Merrill Lynch, his business; 
Ixihaviour is governed very strictly. There are, for example, 
severe limits to his freedom to trade personally; and no 
Merrill Lynch executive is i)aid any direct commission. 

2 . Full freedom for the executive in any office to 
call on all the services of Merrill Lynch for you, his client. 
Without having to refer to any remote headquarters, he 
has, literally, at his fingertips, access to the industry’s 
largest securities research department through tlio most 
advanced electronic information systems. Through his 
private high-speed wire he can consult Tokyo, New York 
or Toronto for you as quickly from Cannes as from 
Chicago. 

Thus, to a degree unusual in big firms, the whole 
strength of Merrill Lynch is available to you through any 
one office, so there is massive international strength 
behind your international dealings. And Merrill Lynch 
sees no contradiction between exercising strong central 
control over the selection and business conduct of your 
executive, and then recognizing his unusual calibre by 
giving him unusual niari-on-the-spot power to serve you. 

Two final points about size, and strength. Merrill 
Lynch's enormous retail network means that you can 
often deal in very large blocks without disturbing the 
market, or your anonymity; but the firm is so strong that 
it is independent of any single source of income- so not 
even the biggest deal, or the biggest customer, can affect 
Merrill Lyncli’s objectivity. 

THE INTERNATIONAL COMPETENCE 
OF MERRILL LYNCH 

No doubt you have heard a lot about Merrill 
Lynch’s huge investment in electronic equipment: but 
new customers, however sophisticated, continue to be 
impressed by its speed and effectiveness. Consider two 
examples, from opposite ends of the investment scale : 

EXAMPLE I. You walk into your nearest Merrill 
Lynch office. Ask about a stock. If it is a reasonably 
well-known U.S. one, the executive you're talking to can 


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TH£ BGONOMIST JANUARY 15^ I972 


69 


press a code and read you off the price in Now York at 
that moment — the closing price, the high, the low, and 
the number of shares traded today. 

Place an order for a security tradetl on the New 
York Stock Exchange. He will use his high-speed private 
wire direct to the floor of the exchange. Not only that, 
but his order is electronically guided to the Merrill I.yiu'h 
floorbroker (one of 17 on the New York Stock Exchange) 
who is nearest the post where that stock is tradfxl. He 
buys for you, and confirms the order straight away. 
(Merrill Lynch can't protnise that you'll beat the record 
set when an order from the U.S. West Coast was received, 
filled and confinned all within 14 seconds, but your 
international order will have the same speed and priority 
as dome.stic ones.) 

Next day an invoice is wired through giving 
complete details of the transaction. This ability to supply 
written details quickly provides Merrill Lynch customers 
with an important control instrument. 

KX AMPLE 2. You wish to scll a large l>lock of Euro- 
bonds. In addition to underwriting Eurobond issues. 
Merrill Lynch maintains an active secondary market in 
many Eurobond securities through the facilities of Merrill 
Lynch, Pierce, F'enner, iuid Smith Trading Services 
Company S.A. in Geneva, This company is in contact by 
telex and telephone with leading traders throughout the 
w'orld and can transmit quotations on over 200 out- 
standing issues for the benefit of issuers and investors 
alike. Once again, the scale of Merrill Lynch's retail 
oj)cration is such that large blocks can usually be dealt in 
witli little risk of disturbing either the market or your 
anonymity. 

Competence - the ability habitually to get things 
right. This goal can be achieved by training, and by 
discipline, and the maximum use of machines for 
mechanical tasks. In the final analysis a high level of 
competence means that there is more of your executive 
available to you for what he is best at ; judging your 
needs, using his skills to help you, offering advice and 
solid services. 

THE INTERNATIONAL 
INVENTIVENESS 
OF MERRILL LYNCH 

As with the other virtues, this is partly a 
matter of making the whole of Merrill Lynch effec- 


tively available for vour international dealings; and partly 
to do with activities which are specifically international. 

Merrill Lynch is inherentlv an innovation ('om* 
pany. One exam])le of the kind of innovation available 
to international investors is the aj)plication of computers 
to portfolio analysis. Expressed very simply, this is what 
happens: each common stock in a portfolio lias its ]x-r- 
formance over the past s(‘ven years compared, through 
55 ratios, with those of 2,200 of the largest VI. S. and 
Canadian companies in our computer data bank. The 
resulting decile range analysis shows at a glance into 
which performance range the stock has fallen- and, very 
often, indicates c U'ar reasons. Never before lias so mucli 
information been so (juickly available to help the* executive* 
and the investor with their decisions. 

On the purely international front, Merrill Lynch 
has been particularly well pla('(;d to play a creative role 
in new forms of finance, such as Eurodollar securities-^ 
where, for example, the (existence ol the Merrill Lynch 
Tokyo o[)eration has facilitated the underw'riting of 
issues of well establi.shed Japanese companies who wished 
to tap Eurcxiollar funds; these' securities thus became 
more readily available to international investors. 

This kind of involvement in tlie new dc'velojiments 
in international finance develops skills which are now 
eager to be put to further u.sc* as. for example, in the 
evolution of European shares on a continental ba.sis 
irrespective of national frontiers. 

WHAT ARE YOU GOING TO NEED 
FROM YOUR FINANCIAL HOUSE? 

Merrill Lynch believes that you are going to 
demand more than brokerage, or even international 
brokerage service's. I’liat as \’ou need to call on more and 
more si)ecialize(l financial services you will find it more 
convenient to find most of them under the same roof, 
sharing the same philosophy and high standards. Merrill 
Lynch, by exi)ansion and diversification, is putting con- 
siderable resources into becoming what you are 
going to need: a fully-rounded iniernaiioned finan- 
cial house. 

As an international investor, you may find 
it us(dul to consider the criteria of international 
strength, cornixstence and inventiveness; and to 
apply them first to your present arrangements, 
then to those offered by Merrill Lynch. 



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70 


BUSINESS : BRITAIN 


THE BbONCmiST JANVARV 1 5, 1972 


Continued from page 67 
areas to rise from £500,000 in the 
financial year 1971-72 to £i|in in 
1972-73. The projects (museums, wild 
life sanctuaries, car parks, information 
kiosks and the like) are unlikely to 
bring a quick return, but. can help to 
attract tourists, lliere could be the 
same bandwagon effect as the hotel 
development incentives had, with 
£50111 committed in England alone. 

The most expensive single tourist 
project financed so far was worth 
£50,000. But the size may grow in 
time, and the ETB can pay up to 49 
per cent of the total cost, compared 


with a maximum grant of 25 per cent 
under the hotels scheme. However, only 
about half the funds are paid out in 
grants ; the resit are loans ait commer- 
cial interest rates for up to 10 yeare. 
'Fhere is a third form of support avail- 
able under tijc Tourism Act : the acqui- 
sition of shares hy the ETB in the 
company which carries out the project. 
But the E'lB has never yet acquired 
any such shares. When arr applic^ation 
was made the (Government refused it 
permission to take up shares. 
A grant had (o be given instead. But 
why shouldn’t the taxpayer get a cut 
of the profit ? 


Don't meddle, Maurice 


Share-incentive schemes arr* all the rage, 
as a survey for the British Tnsiitutc of 
Management shows* The number in 
operation is not known, but has more 
than df)ubletl in the f)a^t year. Even so, 
fewer than 5 per cent of public com- 
panies have one, compared with about 
70 per cent in the Lu ted States, so the 
scope for growth is 'virtually unlimited. 
Managers with a stake in the company 
are given an jncrritive to work better, 
and ha\e a greater sense of identity 
with the conijKtny and its progress. This 
identity helps t(. prevrnt the loss of 
key staff ; anti most schemes only 
benefit managers who .stay throughout 
the term of the scheme, which tends to 
be a number of years 

There are four methods in common 
use by which the manager may linam ( 
the purchast of shares : straight pay- 
ment, loans from the trustees to the 
St heme, part payment, or options. Most 
St hemes with loans do not charge 
interest on the loans. Typically, the 
loan IS ft)!' the purchase t>f .special 
intcntive shares, which carry no divi- 
dend or voting rights ft)r five yca^s, but 
convert into ordinary shares after that. 
So, in effect, ut^ money t hanges hands 
for five years, and then the incentive 
share holder buys ordinary shares at 
the original price of the incentive shares. 

This means that the incentive shares 
should originally be priced above ihe 
ordinary shares, since most shares ran 
be expected to go up on a five-year 
view, particularly if they are to be wtuth 
holding under a .share-incentive .scheme. 
Much the same is true of schemes whete 
there is part-payment for the incentive 
shares at the beginning 01 the scheme, 
since the part-payment is usually veiy 
small, typically 3p per share or lc.ss. 

The incentive clement u.:ually derives 
simply from the need to keep up the 
share price by good company perfor- 
mance. But a minority of schemes 
reinforce this by stipulating specific per- 


* Share Incentive Schemes for Execu- 
tives, By S. W. R. Burdon. BIM, £5. 


formance targets, in terms of profits. 
This makes the shares less valuable, so 
that they can be issued at a di.scount 
on the market price of the ordinary 
shares. The tougher the profits target, 
the greater the discount. This means 
that the shareholders arc better pro- 
tected, since higher profits mean higher 
dividends, and the managers have the 
chance of a bigger capital gain at the 
end of the day — ^more .stick and more 
carrot. 

'rhe meteoric growth of shan‘- 
incentive schemes has prodiwed a 
slightly Pavlovian call for legislation 
t.) control them, J'here is already 
legislation to protect both the .share- 
holders and the Inland Revenue. The 
interests of those two parlies are almost 
id<-ntical, and their main concern must 
be tt) ensure that the price of inreniive 
shares is right, bearing in mind the 
possible gains and losses attached to 
holding them. Provided the price is 
right, the revenue has no particular 
objection to the benefits being taxed 
as capital gain, since the purchase is 
a capital venture rather than a form of 
remuneration. Shareholders cannot 
suffer from dilution of the equity pro- 
vided the managers who lake part in 
.schemes have been made to pay the 
Company a fair price for their shares. 

So the critical requirement is not new 
legislation to control schemes but 
adequate vigilance by the revenue and 
by shareholders. The revenue is the 
more advanced. For some years it has 
been vetting .schemes to ensure that 
benefit^: accruing to managers can 
reasonably be regarded as capital gains. 

rhis supervision has virtually done 
the shareholders’ job for them, as far 
as the price of incentive shares is con- 
cerned. But the shareholders have a 
special inccrest in .schemes with profits 
targets. So it is welcome that the 
National Association of Pension Funds 
set out some guidelines for share 
schemes last summer. These guidelines 
were rather vague, but they were a start. 

There has also been pressure from 


Shipbuilding 

A matter of faith 

Encouraging noises are coming from 
'Fexas about possible buyers for Clyde- 
bank, altliough whether the Texans, or 
their unnamed backers, will put their 
money where their mouth is remains to 
be seen. 'Fhe most likely use for Clyde- 
bank is to build liquid gas carriers, 
which have never been built in Britain 
before, and it suggests that one future 
for British sltipbuilding may still be 
ill highly specialised .ships requiring 
heavy capital investment. It is no 



You needn’t worry 


Conservative MPs to restore options as 
a respectable method of financing share 
purchase by managers. This was effec- 
tively ruled out by the iqOfi legislation, 
which made all benefits from .such 
.schemes liable to income tax and surtax 
instead of capital gains tax. Straight- 
forward options involve no risk, since 
they need not be exercised if the share 
price goes down ; so they can only be 
granted without harming current share- 
holders if the exercise price is well 
above the current share price. In fact, 
before iqGfi, they were often issued at 
exercise prices well btlow the cunent 
share price. They wen- a form of hidden 
remuneration to managers, taxable as 
capital gains, and thus at the expense 
of the shareholders and the revenue. 

If options arc to be restored to favour 
without this drawback the legislation 
wdll have to be tough about the price 
at which they may be granted. Oiher- 
w'ise, the combined pressure of the 
institutions and the Labour party will 
kill off stock options again, probably 
retrospectively, as it did in 1966. Pushed 
by Mr Peter Hordern during last year’s 
Finance Bill, the Chief Secretary to the 
Treasury, Mr Maurice Macmillan, 
promised to legislate “ in due course.” 
He should resist the temptation both 
to be too liberal towards options and to 
meddle with the present set-up for 
other share-incentive schemcc. 


nidB ianuary 13^ 1972 

coincidence that Cammell Laird’s 
management is expected to issue a 
report to its shareholders next week 
saying that it must concentrate on just 
this sort of thing : oil rigs, naval work 
and liquid gas — ^and even Guinness — 
carriers. 

The yen and mark revaluations may 
change a lot, but at present the 
Japanese are doing everything they can 
to hold prices as near as possible to 
what they were before the realignment. 
A glut of shipping is expected for much 
of the next five years, and there is not 
likely to be a great market for the 
simple standard ships Upper Clyde 
Shipbuilders has been working on 
recently. UCS’s successor, Govan Ship- 
builders, says there are plenty of pos- 
sible orders, provided the Clydebank 
and Linthouse yards are closed. Were 
this so, Govan must be more in demand 
than almost any yard in the world, 
which seems unlikely. Indeed, it is 
thought that the report commissioned 
by the Government on Govan’s pros- 
pects will suggest its best chance of 
picking up orders in a very bear market 
is by going for the kind of ships 
Cammell Laird is interested in. 

If so, capital investment is needed 
in British shipbuilding more than ever, 
which is why Cammell Laird is likely 
to ask its shareholders, who include 
the Government, for more capital. 
Liquid gas carriers can work out at 
£3om apiece, and are so expensive that 
even airships are being seriously con- 
sidered as an alternative for the car- 
riage of gas, about the only cargo that 
has any hope of getting the airship 
lobby off the ground. Even yards pro- 
ducing conventional ships are badly in 
need of modernisation. Swan Hunter, 
by far Britain’s largest builder, proudly 


BUSmSSS : BRITAIN 

announced a £3m investment recently 
to boost output of super tankers at 
one of its berths. But the hoped for 
output was only a quarter of that 
planned at some Japanese yards. 

This raises the question of Govern- 
ment aid to the shipbuilding industry. 
One source suggests British yards will 
need £7om of capital investment by 
1975. Some of this could come from 
such commercial interests as the pos- 
sible saviours of Clydebank. I'he idea 
of vertical integration has a lot of 
attractions in shipbuilding. Vertical 
integration lias worked well enough in 
Japan. 

m 

Three-decker ? 

A prominent value-added tax pundit, 
Mr Lindsay Duncan, made the chilling 
prediction on Tuesday that there would 
be three rates of Vat apart from the 
zero rate .to be applied to exports and 
food. He expects a standard rate of 
10 per cent, with a higher rate of 21.25 
per cent and a reduced rate of 5 per 
cent. These predictions are not based 
on pronouncements from the Customs 
and Excise or other official sources, 
but on an analysis of sacred cows. High 
rates of tax on luxuries are a sacred 
British cow that the Government will 
not want (or dare) to touch. A reduced 
rate is usual among common market 
countries, and may well be recommen- 
ded for all of them by the council of 
ministers, so there is a European 
sacred beast as well. 

But the Scandinavian countries all 
have single-rate Vats without any harm 
being done to the worst-off, because 
they made welfare adjustments when 


1 ^ 

lintroducing the 'tax. Mr Duncan would 
like Britain to do the .same : the -tax 
would be far easier to run, and the 
welfare increases would only need to 
be small with a 10 per cent Vat rate, 
and food and housing free of the tax. 
The Government should follow the 
Scandinavian lead. 

Films 

Outranked 

There are encouraging signs of a shake- 
up in the monopolistic world of British 
cinemas. Two chains, Rank witli 228 
sites (and 250 screens, since it began 
dividing big cinemas into two or three 
smaller ones) and EMI ^ex-Associated 
British Pictures Corporation, with 251 
sites and 273 screens), control the 
market between them. Many smaller 
chains and independent cinemas .simply 
attach themselves to the Rank or EMI 
release pattern and take what is given 
them. Facing these two chains and 
their links are the major American 
film distributors, who for years have 
given practically all their pictures to 
the one chain or the other to handle. 
Now one of the distributors, Universal, 
has broken from Rank. It has decided 
to have its films shown in EMI cinemas. 

Universal rides tandem with 
Paramount in the overseas markeiting 
of its films, and Paramount has always 
been with the other lot. The joint 
company could either have chosen 
Rank (Universal still has another year 
of a distribution agreement with Rank) 
or EMI, and it has chosen EMI. That 
is the company most often in the news 
— evidence of a greater flair for show- 
manship — and which makes a big fuss 
over its more flexible exhibition policy. 


Key indicators : British economy 


External trade 

Surplus of £36m in December 
took the total surplus for 1971 
to a record £295m. 

Retail trade 

Fen in November from 
exceptionally high October 
level. But underlying trend still 
upward. 

Steel output 
As expected still low in 
December and 1971 's 23.8m tons 
was the lowest annual figure 
since 1983. 


Percentage change on 



Month 

Index 

1963=100 

previous 

month 

three 

months 

one 

year 

Industrial 

production* 

October 

125.5 

"1.1 

-0.2 

+0.2 

employment* 

October 

90.3 

-0.5 

-1.0 

-4.8 

productivity* 

October 

139.0 

-0.6 

+0.8 

+5.3 

Export trade*t 

December 

156 

+9 

-1 

+3 

Eng'g orders on hand* 

October 

118 

nil 

-fl 

-4 

Retail trade* 

November 

112.9 

-1.5 

•fO.6 

+3.3 

Unemployment* 

December 

171.6 

-1-0.8 

+5.2 

+463 

Retail prices 

Export prices 

November 

151.8 

.+0.6 

+1.3 

+9.2 

October 

145 

nil 

+2 

+10 

Import prices 

October 

133 

-1 

nil 


Wage rates (weekly) 

November 

169.3 

+0.8 

+1.5 

+10.1 


Export trade, retar/ trade, engtneerfng order books: in volume terms (value at 
constant prices). Unemployment: wholly unemployed excluding school-leavers; 
latest rate 3.8 per cent. ^ 

*SeasonsMy a djusted ^Provisional 



72 


THE ECC^MIST JANUARY I5, I973 


International 


BUSINESS 

Fragile: handle these rates 
with care 


Most central bankers had expected 
that there would be a huge reflux of 
dollars to New York around the turn 
of the year. Nothing of the sort has 
happened, except that France has lost 
about half of the $i billion that 
flooded into Paris between November 
25th and December i8th Admittedly, 
technical factors are part of the 
explanation. Some of the funds that fled 
New York in the last weeks before 
December i8th were invested in three- 
month and six-month bills that have 
yet to reach maturity. There is not yet 
a strong interest rate pull in favour of 
dollars : indeed, in New York this week 
Treasury bill rates tumbled to a nine- 
year low of 3.1 per cent, and the 
Federal Reserve lowered its key 
repurchase rate for government 
securities to a seven-year low of 3J per 
cent. 

Paradoxically, the fact that many 
of the major European currencies were, 
until ver\^ recently, cpiiie close to their 
new floors seems to have induced 
some .s[)eculators to wait. Nolxxlv 
expects the weak currencies to be 
allowed to float below their new floors 


The decline in rates 

3 niontlu.j’r*'. 



mid*month 

1970 1971 72 


for at least the first few decent months 
of the new “ fixed system ; so specu- 
lators think they may as well hold on to 
the cheap ones, reckoning they have 
nothing to lose. Among the stronger 
currencies, so far only the guilder and 
Belgian franc have gone above their 
new central rates. Many eyes are on 
the interest rate on three-month h^uro- 
dollar bills. It has already come down 
a full point, to 5^ per cent, since the 
turn of the year, pushed by the fall 
in rates in New York ; when and if the 
decline gains steam, this will be a sign 
that that is where Europe is putting its 
money. 

But already there is mounting discus- 
sion about when the Washington 
currency package will come unstuck. 
Herr Karl Schiller, the (/ernian 
economics minister, never backward, 
has described it as a fragile work of 
art.” In Tokyo, bankers and economists 
are talking about the next upvaluation 
of the yen, in 1972 or 1973. Two 
pointers suggest that the yen is not yet 
any too dear : there was an unexpec- 
tedly large inflow of dollars into Tokyo 
($200m in a day) immediately after the 
lifting of the ban on advance payments 
for Japanese exports, and new export 
credits opened last month were over 
a fifth higher than a year ago. Other 
bankers have been excited by the 
flurry that sent the London gold price 
to a post- 1 949 high near to $46 an 
ounce at one point on Monday, ^fore 
it ea.sed back to $45.42 by Thursday. 
It is not true that buyers have been 
making heavy speculative demands for 
gold, but it is true that sellers have 
been holding back. One assumption in 
the market's calculations may be that 
the hefty flevaluation of the rand will 
eas<* the pressure on South Africa to 
sell gold ; but Pretoria insists that, up 
to the end of December, it was still 
selling more than it was producing. 


One story going the rounds has been 
that the Americans might consider a 
larger increa.se in the official gold price. 
This still looks completely unfounded, 
but its persistence is a signal of the 
credibility gap left by the Washington 
agreements. For this Mr Nixon's tactics 
are partly to blame. His insistence that 
the new exchange rates must be backed 
up by major trade concessions to 
America — which he is not going to get 
— is taken by some to confirm that 
everything could still return to the 
melting pot. Oddly, while some are 
talking of a bigger rise in the price of 
gold, it is still not quite certain that 
Congress will agree to raise the dollar 
price of gold at all. Not that this 
would seem to matter in practice ; the 
International Monetary Fund has 
already worked out a three-cornered 
method of effectively upvaluing 
the new reserve assets, SDRs, by the 
amount of the promised change in the 
dollar price of gold, whether or not 
the promise is fulfilled. Meanwhile, the 
quarrel continues as to whether com- 
mon market countries should trv' to 
narrow^ the permitted margin of fluc- 
tuation between their currencies. It is 
important for Britain that they should 
not. And one does hope that Mr Barber 
will start saying that loudiv after 
next week’s signing of the treaty of 
Britain’s accession. 

qu 

Talking up the 
money 

Geneva 

The biggest haggle in ^e world, over 
the price increases that the oil com- 
panies will have to pay the oil coun- 
tries after the devaluation of the dollar, 
began quietly on Monday in Geneva. 
What divided the 20 major oil com- 
panies from the 1 1 member-nations of 
the Organisation of Petroleum Export- 
ing Countries was somewhere around 
£6om a year, which is about half the 
annual revenue tha-t the OPEC coun- 
tries now reckon to have lost because 
of the dollar devaluation. 



THE BGONOMIST JANUARY !5, ig^JQ 

The companies started wiith a com- 
plex proposal based on backpayments 
tied to the International Monetary 
Fund’s index of prices— intended to 
show the effect of inflation on the oil 
countries’ imports from the industria- 
lised nations. The oil states banged in 
a demand for 12 per cent more overall 
and asked for £28m back pay imme- 
diately to cover the period since "August 
15th. So frosty was the oil companies’ 
response to this (for their plan was 
worth about 6 per cent) that some 
Arab ministers wanted to pack and go 
home. But they did not. Officially the 
•talks are only about what the six Gulf 
oil states (Iran, Iraq, Saudi Arabia, 
Kuwait, Abu Dhabi and Qatar) should 
be paid. But in reality it is the world 
price that is being talked up in Geneva. 
For Nigeria, Venezuela, Indonesia and 
Algeria also had to be in on the dis- 
cussions (so was Libya, but its repre- 
sentative abruptly left Switzerland 
without explanation) because all coun- 
tries whose currencies have been 
revalued against the dollar now get 
their oil more cheaply. 

I'he talks were not expected to reach 
a settlement even on Friday, but there 
is no particular sense of urgency about 
them. Both sides have after this to 
open talks on that other thorny prob- 
lem, participation by the Arabs in the 
companies’ oil conces.sions. And a sur- 
prising number of Arab oil negotiators 
are expert skiers. 

Norway and EEC 

No deal 

Brussels 

Whether Norway will join the 
European community in 1973, let 
alone sign the treaty with Britain, 
Ireland and Denmark on January 
22nd, is now an open question. But 
Ireland seems in. On Thursday the Irish 
settled their dispute with the Six and 
agreed to a sugar beet quota of 150,000 
tons, 13,000 tons higher than the Six’s 
initial offer but 20,000 tons lower than 
current Irish production. 

The Norwegian talks broke down on 
the two points which caused Mr 
Rippon so much trouble. The first was 
the extent of the Norwegian coastline, 
for which fishing rights would be 
reserved to local fishermen for the 
lo-year transition period. The 
Norwegians are seeking the 12-mile 
limit for the whole of their northern 
and western coasts from the Soviet 
border to Cape Landesnes in the south, 
SO that the 6<^mile limit would only 
apply to Norway’s short eastern coast. 


BUSINESS ; INTERNATIONAL 

The Six considered this excessive, but 
a compromise would certainly have 
been reached if there had been agree- 
ment on the other issue — the review 
clause that governs what will happen 
after the lo-year transition. 

Here the Six have gone on record 
that the enlarged community will then 
take full account of the particular 
economic and social problems facing 
Norway, including the structural 
problems of its fishing industry. They 
confirmed that continued limitation on 
coastal fishing rights in certain areas 
could be allowed where conditions 
made it impossible to apply the free 
access provisions of the common 
fisheries policy. But the Norwegians 
wanted the protocol to provide an even 
clearer assurance that fishing rights 
within coastal waters would continue 
to be reserved for local fishermen as 
long as this was justified by economic 
and social conditions in the coastal 
areas ; and this the Six would not 
accept. 

The difference is one of presentation 
rather than of substance. When the 
enlarged community comes to review 
the situation in 198'', by which time the 
Ten should have agreed on a common 
policy on the conservation of fish stocks 
in the North Sea, the exact wording 
of the review clause is likely to be 
academic. For political reasons, though, 
Oslo has to get a review clause which 
provides reasonable safeguards for its 
fishermen and which can be sold to the 
coastal population, whose vote Avill be 
vital in the Norwegian referendum. 

The stalling tactics the Norwegians 
pursued throughout November and 
December, in the hope of being able 
to negotiate a separate agreement with 
the Six, have now left them with very 
little room for manoeuvre. They were 
going l)ack to talk to the Commission 
again on Friday. 

Greenland salmon 

Hook, line and. . . 

Copenhagen 

Denmark may be heading for defeat 
in the salmon war. The salmon con- 
servation law, whisked through the 
United States Congress, has pven 
PreMdent Nixon powers to ban imports 
of fish products from countries that 
overfish particular species in - open 
waters. This is aimed at Denmark’s 
fisheries off Greenland and is a success 
for the American environmentalists 
who took up the cudgek a year 
ago, led by Mr Bing Crosby. Danish 
fish exports to America are running at 
$3 1.5m a vear, and have been rising 


73 



Me ? Harming salmon ? You're joking 


rapidly. 

Marine biologists in Denmark claim 
that there is no evidence that fi.shing 
off Greenland has reduced the fresh- 
water .salmon population in Britain or 
America, and they cite figures show- 
ing that the 1970 dip in freshwater 
salmon in England and Scotland was 
witliin normal year-to-year variations. 
The Danish minister for fisheries, Mr 
Christian Thoni.sen, pooh-poohs the 
very suggestion that the 12-14 Danish- 
based boats that fi.sh off the Greenland 
coast could cause anything like the 
havoc attributed to them. Danes say 
that the real cause of the decline (if 
it exists) is more likely to l)e die pollu- 
tion in America’s own rivers. When the 
new Amerioan ambassador, Mr Fr«l 
Russell, took up his post last month, 
he angered public opinion by attack- 
ing the Danish stand on Greece and 
North Vietnam, but even he agreed 
that the salmon war was primarily an 
“ attention-getting ” device for certain 
individuals in America. 

However that may be, the Green- 
landers themselves have quite differ- 
ent views. The minister for Greenland, 
Mr Knut Hertling (who is himself a 
Greenlander), also wants the Danes 
to be banned from fishing outside 
Greenland’s is-mile Mmiit. The Danish 
prime minister, Mr Jens Otto Krag, has 
tactfully avoided taking sides, saying 
it is all just a scientific question. The 
Danish government, however, has made 
quiet moves to put a ceiling on Danish 
fishing off Greenland, and to persuade 
fishermen to turn to less controversial 
waters. But now the Americans are 
pressing for further talks, and with the 
new law behind them will be bargain- 
ing from strength. 


im EonmiUftT lAtiu/uty 15^ 


This appears as a matter of record only 


£10,000,000 

Tema Loan Facility 


Selection Trust Limited 

arranged by 

Morgan Grenfell & Co. Limited 

and provided by 

Morgan Grenfell & Co. Limited 
Canadian Imperial Bank of Commerce 
Lloyds and Bolsa International Bank Limited 
National Bank of Australasia Limited 
National Westminster Bank Group 



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THB BOONOICIST JANUARY I5, 197a 

Unemployment 

Ireland is where 
it hurts most 

Britain is now far from being the only 
European country where unemploy- 
ment has loomed into a major political 
problem. Even in France, the number 
of unemployed has risen over the past 
12 months by 39 per cent, though the 
growth forecast for France is the 
strongest of the European countries. On 
Wednesday, M. Oiscard d’Estaing, the 
finance minister, announced his expec- 
ted measures to stimulate the economy, 
and the next day the Bank of France 
clipped its discount rate by a half-point, 
to 6 per cent. 

The Wednesday hand-out consisted 
of a speed-up of credits for housing 
(public and private) and other invest- 
ment programmes and also a big 
change in the administration of the 
value-added tax. At present French 
firms pay Vat on their turnover 
in one month, but get a Vat rebate 
for the corresponding purchases only 
in the next montli. Now this backlog 
is to be run down by one-quarter, 
which could release some Fri.2 bil- 
lion (£95m^ to industry. Altogether the 
package is expected to inject £34om 
into the I'rench economy over the next 
six months. 

The official] French unemployment 
rate (1.9 per cent) is still low by 
British standards, even when it is 
bumped up to 2.5 per cent to allow 
for under-recording. (Countries have 
'different ideas about how to count 
their jobless, sometimes linked to poli- 
tical motives, sometimes to outmoded 
administrative procedures.) Italy, by 
contrast, has a very real problem by any 
standards. Even che official figures put 
the unemployment rate at 4.3 per cent, 
and no one puts much faith in them. 
In fact, the persistent recession in Italy, 
oombined with the narrowing of 
employment (q)portuniities for Italians 
elsewhere in Europe, has resulted in a 
masnve flow of labour from the towns 
back to 'the country, and even the 
much-quoited figure of im unemployed 
underestimates the real position. 

How much of the 62,000 jump in 
unemployed in Germany in a mild 
December, accompanied by a sharp 
dn^ in the ratio of vacancies to 
unemployed, was due to the side-effects 
of the metalworkers’ strike remains to 
be seen. In any case, Germany has such 
an enormous cushion tn foreign 
workers that joblessness is still far from 
a major problem. And Sweden, 


BUSINBSS : INTERNATIONAL 

although it can complain its unem- 
ployment has grovm faster than almost 
anywhere else in Europe, still has a 
rate of no more than 1.3 per cent. 
After the expansionary budget 
presented by the finance minister, Mr 
Gunnar Strang, on Tuesday, jobless 
ness in Sweden could now have just 
about peaked. 

The highest unemployment rate in 
Europe, of 9 per cent, is, of course, in 
Ireland. The republic’s industrialisation 
drive is not creating enough new jobs 
for the 10,000 or so who leave the land 
every year and, with jobs scarce in 
Britain, the rate of emigration there 
of 15,000 a year in the 1960s and a 
peak of 50,000 a year in thc" 1950s 
dwindled to 2,000 in 1971. Ireland’s 
unemployineirt has now developed into 
a dangerous political issue, with the 
opposition parties demanding an emer- 
gency debate and invocation of the 
emergency provisions of ttie free trade 
area agreement, and the trade unions 
calling for an overall policy of working 
to rule, the banning of overtime and 
crash government spending. More 
serious, the row has blown up at the 
very moment wh'*n the government 
has had to compromise with the Six 
over the single disputed Issue in the 
Irish entry negotiations : the sugar beet 
quota. Doubts have even arisen over 
whether die government will get its 
majority for entry in the referendum 
in March or April. 

German labour 

Jitters 

Hamburg 

On Tuesday the metalworkers’ union, 
IG Metall, called for a strike ballot in 
the iron and steel industry of North- 
Rhine-Westphalia. The union is 
demanding a 6 per cent wage increase 
for the period up to September 30th. 
ITie employers, i^ile conceding 6 per 
cent, are insisting that the contract 
shoidd run to the end of 1972. 

The strikers, if they had their way. 

Key indicators: world 

Cocoa 

Figures released this week show that 
grindings (a measure of consumer 
demand) in Amenca and Holland are 
well up. This, together with reports 
that Ghana has withdrawn as n 
seller and estimates that 
Nigeria's crop will be lower than 
expected, has given the market a 
definitely bullish tone, and prices 
have risen to £212 per ton. 


75 

would be getting a rise of 7^ per cent 
at an annual rate, outside ‘the govern- 
ment guidelines ; die employers’ offer 
would be within them. Because of the 
steel industry’s sjiecial form of co-deter- 
mination (employf*rR and unions have 
equal representation on firms’ super- 
visory boards), the unions know all 
the industry’s current difficulties. One 
employee in seven is now on short- 
time ; and ri.sing imports (onibined 
with reduced production have raised 
unit costs by one-fifth over 124 months. 
Hence the union’s obvious reluctance 
to call a strike— it has already asked 
for new negotiations. A strike m the 
steel industry would be >the first one 
for half a century. 

Meanwhile the economic slowdown is 
reflected in the settlement between the 
union for public employees and the 
federal and lander governineruts of 6 per 
cent for 12 months. Increasingly 
unease on employment is growing. 
Opel, the (Tenoral Motors sulisidy, is to 
halt production at its Bochum works for 
five days from January 24di, because 
of rising stocks. And Japanese com- 
petition is now becoming increasingly 
serious in some industrial sectors. 
Camera production has been one well- 
known instance. More recently has 
come the news of tlie approaching 
closure of Philips Rlectrolica, the 
Bremen subsidiary of tlie German 
branch of Philips, the Dutch electrical 
concern. The company, which employs 
4^)0 people, makes computer compo- 
nents and small electrical calculating 
maoliines. The computer components 
side lias been hit by die cutback in 
capital investment by Gennan industry. 
And the market for small calculating 
machines has been swamped by 
Japanese products, selling at prices 
between £93 and £232 against com- 
parable Gennan products priced at 
a minimum £190 and mostly more. 
I’he Electrolica has capacity for mak- 
ing 70,000 units a year but its sales 
have recently been running at around 
18,000. 

commodity prices 



Index 

Percentage 


1963 

=100 

change on 


Jan 

Jan 

one 

one 


5 

12 

month 

year 

All items 

121.1 

125.1* 

+ 4.6 

+ 4.0 

Food 

140.0 

142.5* 

+ 7.3 

+ 29 

Fibres 

91.4 

91.9* 

+ 2.1 

+20.4 

Metals 

174.4 

176.9 

+ 1 8 

-- 1.3 

Misc 

101.2 

100.5* 

+ 0.4 

- 8.2 


*Provislonal 



BU8INBSS : INTERNAtlOMAL 


tHB EOONOMBST jAMUionr 15, 


76 

World Bank 

Please don't go 
just yet 

Washington 

When President Johnson made up his 
mind in 1967 to make Mr Robert 
McNamara, then his Secretary of 
Defence, president of the World Bank, 
the announcement was so bungled that 
the news came out before the bank's 
executive directors had even decided 
Mr McNamara was the man they 
wanted to appoint. This time it was 
the executive directors w'ho moved to 
reappoint Mr McNamara well before 
the end of his term in April next year. 
Why so soon ? Because it is easier to 
plan four or five years ahead when the 
identity of the executive chief is settled 
well ahead, too. I’his year is also 
American presidential election year 
and the World Bank appointment 
needs to be kept clear of .American 
politics. 

Mr McNamara's reappointment was 
not automatic. He is not a particular 
political protege of the Nixon Adminis- 
tration, and if the other member 
governments of the World Bank had 
wanted a change they could have liad 
it. They preferred to give him a vote 
of confidence. President Nixon, equally, 
could have prevented Mr McNamara’s 
reappointment had he chosen to. It is 
not as certain as it used to be that 
the American President can impose his 
own choice on other governments : 
}>articulariy when they are sulking, as 
the rest of the world did last autumn, 
over his economic policy. Then it must 
have seemed that the one sure way of 
keeping an American at the head of 
the bank was to keep Mr McNamara. 

To the Nixon Administration the 
World Bank is not the most fascinat- 
ing of institutions. Development aid 
does not stand high among the 
Administration’s priorities, and its 
feelings for the underdeveloped world 
are at best tepid. Through miost of last 
year suggestions trickled out from the 
White House that Mr McNamara 
might have to go, to be replaced 
possibly by Mr David Kennedy (Mr 
Nixon’s first Secretary of the Treasury), 
or the Secretary of Commerce, Mr 
Maurice Stans, One rumour was to the 
effect that the United States would 
accept a foreign president at the World 
Bank if it could get an American 
managing director in place of M. 
Schweitzer at the International Mone- 
tary Fund. However, the President 
himself hod long decided to support 
Mr MejNamara's reappointment and 


had told Mr McNamara so early last 
year. The bank’s directors took more 
time ; their formal request to 
McNamara was not made until 
November. 



Nothing for 
nothing 

Rome’s nine-day wonder of no-fare 
buses is likely to be followed by similar 
experiments in Bologna and Milan. 
They are a mistake. Although the Lon- 
don Labour party is thinking of fight- 
ing its next election on such a ticket, 
free fares are not even a good form 
of socialism. Public transport, three- 
quarters of whose costs are labour, will 
get increasingly expensive anyway. 
Someone has to pay, and if the initial 
burden is transferred from the traveller 
to the ratepayer, it will only get passed 
back to the public in higher prices, 
because in the big cities the ratepayer 
chiefly means businesses. 

It is argued that free fares would 
tempt people out of their cars and so 
cut pollution. This is wishful thinking, 
as the Rome experiment showed; cars 
were as numerous as usual. Price Is 
relatively unimportant to bus cus- 
tomers : what they want is a frequent 
and reliable service with comfort, all 
of which a car provides better than 
a bus. Some people would desert cars 
if bases were free, but tougK controls 
on motorists are much more likely to 
get them switching to buses. Here Rome 
has been laggard. Cars are double and 
treble parked on both sides of the road, 


and where parking controls are sup- 
posed to apply all sorts of people get 
exemption — ^journalists and civil ser- 
vants as well as doctors. There are 
officials to help in parking and there 
are unofficial pirates, while much of 
the army of traffic wardens sits at 
desks. Others are bribable. 

The idea that abolishing fares would 
cut costs does not stand up either. On 
one-man-operated buses there would 
obviously he little saving, and on other 
buses the conductor is there partly to 
help those not agile enough to get 
unaided on and off some of the more 
awkwardly built buses, like Lon- 
don’s rear-entrance ones. It would take 
six years to replace these London buses. 
Similarly, on undergrounds, ticket col- 
lectors perform many duties. The maxi- 
mum staff saving that could be 
achieved on London Transport is about 
£iom, or 7^ per cent of turnover. 
Extra costs have to be offset against 
this. 

Though the experiment in Rome was 
too short to know what would happen 
on a permanent basis, it is a sobering 
thought that bus passengers rose by 
two-thirds. There was a marked ten- 
dency to jump on for short trips which 
would have been walked before. 
If the experiment became perman- 
ent, travel patterns would be dis- 
torted. Without fares bus companies 
would be in a difficult position to resist 
local pressures to lay on limitless bu.s 
services, mere traffic flow figures being 
an imperfect way of judging demand. 
Yet every 80 extras buses needed in 
London would cost another £im a 
year. The staff savings would be 
quickly dispersed. 



There must be a catch, though 


77 


IHB ECONOiladt JANUARY I5, 197a 

ReconlBoMS 

DecbraUan for 
3 years endini 
31 Dec 1871 


Individual Policies 

£ 3 . 80 % per annum 

on sum assured 


plus 

£ 4 , 807 , per annum 

on existing bonuses 


Group Policies 

£ 4 . 00 % per annum 
on benefits secured and 
existing bonuses 


Interim Bonus 

Policies becoming payable after 1 Januar> 
1972 and before the next declaration wil 
until further notice, receive bonuses 
at the same rates. 



A LOT OF LITTLE THINGS ADD UP TO 
THE FINEST HOTELS IN BRUSSELS AND 
PARIS 



A PLACE TO PARK WHEN YOU ARRIVE. 



YEAR-ROUND CLIMATE CONIROL 
rO GIVE YOU COMFORT AND QUIE 



ROOM SERVICE AROUND THE ClOCK 
EVEN WHEN OlHER HOTELS CLOSE 
FOR THE NIGHT. 


HILTON APPOINIMFNIS SECRETARY 
TO HELP YOUR BUSINESS DAY RUN AS 
SMOOTHLY AS IF DOES IN YOUR 
OWN OFFICE 



FAST CHECK-IN AND CHECK-OUT 
SO THAT YOU ARE NEVFR lAIF 
FOR YOUR NEXT APPOINTMENI. 


At the Brussels Hilton and the Pans Hilton u tnjvehmg 
businessman gets what a businossnujrT needs, including things he 
may not expect, for less than he might expect to pay. for 
reservcjtions.rall your travel agent, (jny Hilton International hotel, 
or Hilton Reservation Service. In Lond' jn, call 493-8888; outside 
London, freefone 227, 


BRUSSELS HILTON 

Businessmen's services are so complete, many firms use the Brus.se]s 
Hilton as their Brussels headquarters. So can you. A quiet location, 
only minutes from the city centre. From C/.OO single, C9.40 double. 


PARIS HILTON 

It’s on the Left Bank in the shadow of the Liffel Tower, u stroll from 
the Seine yet only five minutes from the city centre. Parisians love 
it for the American beef at Le Western restaurant. From £9.48 
single, £1 1.88 double. 



BRUSSELS HILTON PARIS HILTON 


Raivs quoted do not tnr lude iemce ond local faxe-, All quoted rates ore subject to 
adiu'itment to i effect fluctuations in Currency Exchange rates 


Head Office : 35 St. Vincent Place Glasgow C.1 




76 


THB SCONOMIS^ JAtiOARY I5, 1:978 


The combination of 


Nabisco, Inc. 


The J. B. Williams Company, Inc. 


has become effective. 


The undersigned initiated this transaction and acted as 
financial adviser to Nabisco ^ Inc. in the negotiations. 


Lazard Freres & Co. 


TOWN MID GMm IW 

One of the ten largest property investment groups in Europe, specialising in shop and office 
development and holding properties valued at over £91 million, 72 per cent of them freehold. 


PoinUi made by the Chairman, 

Mr. Kenneth A. Jones, in reporting on the year 
to March 31, 1971 — "an untypical year, during 
which we had to digest the acquisition of 
the Simo Group”. 

REVENUE Net propi-rlv income has more than 
doubled but a full year's interest has fallen to be paid 
on the Loan Stock issued for the acquisition of Simo. 
The net effect has been to depress the group profits, 
from £734,814 to £650,933. 

This includes £113,869 representing part of a profit 
made on the purchase of a company and the sale of 
the only property that that company owned. Had the 
full profit of £312,796 on this transaction been 
brought to account the profit would have been 
£849,860. As it is, most of the benefit has gone to 
strengthen the assets position. 

ASSET VALUES Before taking into account the 
conversion of the Unsecured Loan Stock, the net 
asset value per share at March 31 , was 213p as 
compared with 136p a year earlier. Allowing for 
conversion the fully diluted value was 140p per share 
as compared with 128p per share a year earlier. 

This marks an improvement of 10.4 per cent, on the 
year. That is the result reckoning from a conservative 


valuation base: broadly, the additional values that 
have been created by the application of work to the 
various development sites, and the additional values 
that will be brought into existence as work proceeds, 
lie dormant in the accounts for future maturing. 
Elating this factor to the quality and character of 
the portfolio, a net asset value per share of 200p by 
1975 (when the Loan Stock becomes convertible) 
would be a more than reasonable assumption. 

BORROWINGS Some £12.2m. of medium-term 
borrowings has been renewed for a further period of 
five and a half years, with beneficial effect on cash 
requirements. Since September 30 the liquid position 
has further improved. 

THE FUTURE The past year was one of progress 
in lettings; of expansion in the development 
programme, now estimated at a value in excess of 
£60m. ; and of refinement in the portfolio. The 
company, owning as it does predominantly fireehold 
properties, is one that will continue to show asset 
growth in the year ahead. Substantial benefits in 
terms of investment earnings are not scheduled to 
accrue in the immediate future, though even in that 
span income from trading should ensure growth in 
total profits. 




me eaoMOMtsT jAMiAttv 15, 197a 


79 


BUSINESS 


Investment 


A Boot for the market 


A lot of people are expecting it. The 
institutions with money waiting in the 
wings to l^e invested would jx>sitively 
welcome it. But it does not come — diat 
elusive technical reaction to the 
market’s amazing 20% rise since 
November ist. Any gloomy news 
about the economy is still discounted, 
and cheerful views arc promptly sub- 
stituted for them instead : glurn details 
about an expected further drop in 
Britain’s capital investment in 1972 are 
regarded as less important than a 
speech by Sir Leslie O'Brien saying 
that he can see definite signs of 
industrial upturn already (ie, that he 
has added his powerful voice to those 
of the I'reasury’ civil servants who have 
probably succeeded in dissuading Mr 
Barber from announcing any purchase 
tax cuts when Parliament reassembles 
next week). At Thursday’s close the 
Financial Times industrial ordinary- 
index stood at 487.0, exactly 3 points 
up on the previous week’s high. 

The market is exhilarated by 
thoughts that a rise of around 5% in 
real gross national product — such as 
many hope for in 1972 — is historically 
usually accompanied by something like 
a 15% or 20% rise in company profits ; 
and there were hopeful signs of this 
even on Wednesday, in the form of a 
30% profits rise from Thorn Electrical 
(the great beneficiary from the colour 
television boom, see page 80) and a 
38% increase reported by Grand 
Metropolitan Hotels. 

Bids are beaten or boosted ; and 
the shares concerned seem to go up in 
response to both. Still the centre of 
rapng speculation — and of just plain 
rage — ^Tnist Houses Forte has ^ne on 
rising since Allied Breweries withdrew 
its offer on Monday ; the share closed 
on Wednesday at i86ip, compared 
with the pre-bid price of 138P. 
Rumours of a new interested party 


behind the aggressive buying of THF 
in the market , are becoming increas- 
ingly credible, rpore perhaps than 
.some of its j)rofits forecasts are. 

The biggest surprise however— 
especially to the Beccham Group -was 
the counterbid for Glaxo on Wednes- 
day from the Boots Company, just as 
the Beecham Ciroup and Glaxo were, 
everybody thought, getting down to a 
nasty fight. 

Besides being agreed, the bid 
from Boots is a sizeable 20% higher 
than its rival’s. The terms, nine Boots 
shares and £4 of 5% convertible loan 
stock for five Glaxo shares, come out 
at around 503P per share of Glaxo and 
make the bid worth £34601 in total. 
According to the latest published 
profits, Glaxo made £24m pre-tax and 
Boots £25m. But the proportion of 
the equity of the combined company 
that Glaxo will be getting is only 41 %, 
rising to 44% after conversion. This 
is because, after years of rationalising 
the merger with Timothy Whites and, 
therefore, flat earnings per share, 
Boots’s profits are surging forward. 

Assuming a 25% growth in the 
current year on the Boots side to £31111, 
the terms of the offer — ^which specify 
that the contributions of both compa- 
nies are reflected — argue for a forecast 



from Glaxo of reduced profits, of 
around £21111. This is the one point 
Cilaxo's shareholders might query, 
(ilaxo's profits are plateau-bound, not 
on a downward slope. So either Boots 
will be forecasting even higher profits 
— it had an excellent Ghristrnas — or 
there will be initial dilution for them. 
But the ofl'er is so far above the pre- 
vious bid that it seems unlikely 
Beecham will come back with a much 
higher offer. Quite rightly, however, 
Beecliarn has reciuested the informa- 
tion Glaxo has supplied to Boots, as 
die takeover rules allow. 

The reasons Boots can bid up high 
are twofold. The financial argument is 
that its shares, at 23 ip, are near an 



Thr00*s a crowd ; Boots* s Nomon, Glaxo* s Wilson, and, in the cold, Beecham' s Edwards 



8o 


BUSINESS : ItilVESTMBNT 


THE EQONOICtjlT JANUARY 1 5, 


all-time peak and are on a highly 
acquisition-suited p/e of 29. The 
industrial argument is that Boots is a 
small (turnover of £3om) pharmaceu- 
ticals producer, in need of more 
capacity and overseas outlets, and 
anxious to expand in this growing field. 
But most of Boots’s total £25701, 
turnover, and none of Glaxo’*s £17301, 
as in retail trading, and the arguments 
for vertical integration in the drugs 
field is riot strong. I'he financial 
aigument is the stronger. From its own 
experience Boots knows that a well- 
planned investment programme, such 
as has cost C^laxo £20111, takes time 
to come to fruition in earnings per 
share, and it intends to harvest the 
fruit. I'here is no real clanger of mono- 
poly, less than there was with 
Beccham's bid. 

Thorn Electrical Industries 

Roses too 

Thorn Electrical Industries' shares rose 
2ip to 493P after the excellent interim 
results on Wednesday. 'Fhe market 
knew that colour television is booming, 
and Thorn’s results showed this with a 
30% rise in profits to £ 19.6m : remark- 
able at this stage in the colour television 
boom since 80% of sets are rented. 
Depreciation is expected first, and the 
profits laier. Instead both have arrived 
together. 

Thorn expects to be able to finance 
the heavy initial co^t of rental without 
calling on shareholders. Its tax charge 
is reduced by the high level of capital 
allowances, and £3111 of the first half’s 
£8111 tax i^rovision i.*' being tucked 
away in tlie tax ecjualisation account; 
and th(‘ company al.>o has adequate 
facilities at the fiuiik, altliough the 
increase of 30^/0 in the interest charge 
to £2. 5m suggests that it has not had 
to make full use of them yet. Cash 
requirements will be over the peak in a 
year or two. 

Thorn has about 60% of the 
specialist rental market — there are 
some general retailers of electrical 
goods who also rent television — so that 
it is in a strong competitive position, 
particularly relative to Japanese and 
other far eastern competition, about 
which Sir Jules Thorn expressed con- 
cern in the last annual report. The 
Japanese have been hinder^ by the 
yen’s revaluation, and a major trading 
attack on Europe will not be so easy for 
them as it was in America. Anyhow, 
Thorn have i7in sets in both black-and- 
white And colour which were cheaper 



than the far eastern competition even 
before the revaluation of the yen. 

Consumer goods, and particularly 
television, contributed nearly 70% of 
Thorn profits last year. The 30% 
improvement .should be maintained to 
give full year pre-tax profits of £48m 
and earnings of 23P per share, putting 
the prospective p/e at 22 at 493p. The 
price is kept down by the low dividend, 
which is covered three times. 1'horn’s 
strength over the whole of its 
market, and the growth of profits, 
should ju.stify a prospective p/e nearer 
to 30 than 20. 

Wall Street 

All business is not 
good business 

New York 

Profit-taking has blunted the swift six- 
week rise in American stock prices. 
The Dow Jones industrial average of 
blue chips closed on Wednesday at 9 1 1 , 
up no points, or 14%, since the end 
of November ; but a meagre 2 points 
of this rise had been added in the last 


five trading days. A number of high- 
priced glamour stocks got caught in 
the profit-taking buzz, including 
Polaroid, Burroi^hs and Baosch and 
Lomb. 

But, even as the big names on the 
New York exchange predictably were 
stepped in their tracks, trading activity 
continued strong on the American 
exchange and in the over-the-counter 
market. Both of them trade mainly in 
the lower-priced and often speculative 
issues which in recent weeks have been 
lurii^ smaller investors back into the 
market. In the six-week rally, the 
index of all shares trading on the 
American exchange has risen 10.5%. 

At mid-week, the Wall Street com- 
munity awoke to the embarrassing 
news that a 1 9-year-old Philadelphia 
college student had for some days been 
phoning a number of brokers in the 
area and had placed orders with some 
of them to buy shares — ^not because he 
wanted the shares but simply to prove 
that the firms’ procedures were lax in 
dealing with the public. The student, 
Mr Abraham Trefl', said he called some 
25 member organisations of the New 
York stock exchange and had his 
orders siccepted and executed by sales- 
men in six of them, including some 
very prominent houses .such as Merrill 
Lynch and Pierce Fenner and Smith. 
Under stock exchange rules, customers' 
men may not accept orders from 
strangers until they have checked out 
their credit ; further, most firms 
require a cash deposit on the initial 
order. Mr TrefTs free ride stood to 
make him a lot of money. The New 
York exchange announced it has called 
all of the salesmen on the carpet; but 
it has directed most of its chagrin at the 
student, saying it is looking into the 
possibility that he violated the stipu- 
lative provisions of the federal securi- 
ties laws, a criminal offence. 


Key indicators 

: world bourses 




Stock price indices 


Percentage change on 


Jan 

1971-72 

one 

one 

one record 

London and Wall 
Street rise 

12 

high 

low 

week 

month 

year high 

through bouts of 

London 

485.0 

485.0 

306.3 

+ 0.2 

+ 5.6 

+41.7 - 7.1 

profit-taking 

Japan boosted by 

New York 910.8 

950.8 

798.0 

+ 0.7 

+ b.4 

+ 8.3 - 8.6 

reflationary 

Canada 

201.4 

201.4 

162.6 

+ 4.2 

+12.2 

+12.2 - 2.5 

budget. Australia 

Australia 

493.8 

518.5 

405.0 

- 1.9 

+ 7.0 

- 1.7 -25.6 

depressed by 

Japan 

207.0 

206.2 

148.3 

4- 7.1 

+10.8 

+33.7 - 0.6 

rumours of cuts 

H'kong 

336.4 

408.3 

201.1 

- 2.1 

+12.7 

+54.7 -17.2 

in Japanese 

Belgium 

99.1 

106.7 

90.7 

+ 1,5 

+ 3.7 

+ 4.4 - 7.7 

imports of 

France 

69.9 

79.2 

61.6 

+ 1.0 

+ 3.6 

- 8.4 -18.8 

minerals. 

Germany 

98.1 

112.7 

87.6 

- 1.3 

+ 4.0 

- 4.2 -30.1 


Holland 

108.9 

128.0 

93.0 

+ 2.8 

+ 7.1 

- 4.8 -18.6 


Italy 

47.3 

60.1 

44.0 

— 

+ 3.1 

-14.3 -59.4 


Sweden 

322.4 

322.4 

245 7 

+ 3.2 

+ 8.6 

+2S.8 -14.1 


Stock prices and yields are on pages 93 and 94 





THB ECONOMIST JANUAEY I5, I979 

Paper 

Is clay the 
greatest ? 

English Cluna Clays depends on the 
paper industry for 90% of its market. 
The worldwide paper recession has hit 
ECC badly, which is why its 1971 
results, announced on Thursday, were 
bad. Pre-tax profits, at £ 11.7m, were 
only slightly up on last year's £1 1.2m. 

However, these figures include 
redundancy payments made in the 
current year. Without these, the 1971 
profits would have been £ 12.2m. Tlie 
market was pleased and marked 
the shares up a few pence. Although the 
world paper market is static, and no 
price ri.se is imminent, the long- 
term prospects of ECC are excellent ; 
it is supplying a steadily growing 
market, mainly overseas, where 
demand is price inelastic. Volume and 
margins are thus easily raised. The 
only problem for ECC is that its main 
markets are in continental Europe, and 
only a small fraction of its sales goes 
to Britain and the United States, the 
two countries where growth prospects 
this year look best. So recovery could 
be delayed until laite 1972, but the 
market should discount it before then. 

Australian mimrals 

Strikes while the 
iron is cold? 

Sydney 

Australia's iron ore producers, after 
a decade of spectacular and uninter- 
rupted growth, are now preparing 
themselves for a troubled vear. 
Revaluation of the Australian dollar 
against the United States dollar, a 
cutback in Japanese steel production 
and Australia’s renewed trade union 
militancy have come within months of 
each other <to cause some hasty revisions 
of profit projections. 

The direct losses from revaluation 
are the easiest to calculate. The largest 
exporter, Hamersley Holdings, will pay 
a penalty of $A8.84m a year for having 
written its contracts with Japanese 
steel mills in American dollars. If the 
level of Australia’s upvatuation rises 
from the present 6,32% to the widely- 
predicted 8.57% the loss would rise 
to around $Ai2m. 

There will be indirect losses as well. 


BUSINESS : INVESTMENT 

Major iron ore producers in South 
Africa, which devalued by a greater 
amount than the United States, and 
several South American countries, 
which have stayed put with the dollar, 
will now enjoy a price advantage ovei 
Australian suppliers. The benefit 
bestowed by geography of a shorter 
haul for bulk carriers will still remain, 
but, as ships get larger, freight 
becomes a smaller proportion of the 
landed price in Japan. There have 
already been some reports of a renewed 
Japanese interest in opening up major 
new fields in South Africa. 

Of more immediate, concern are the 
rumours of a cutback in demand by 
the Japanese. The contracts allow the 
Japanese to take 10% more or 10% 
less than the standard quantity of iron 
ore each year. Last year they took 
10% more — but this time it looks as 
though they will take 10% less, mean- 
ing a turnaround of 20%. Usually the 
figure is agreed in December, but the 
currency revaluation has postponed the 
date until early February. The mills 
might try to cut deliveries even more 
by renegotiating the contracts. The 
latest forecasts out of Tokyo arc for a 
s'teel output of only nom — 120m tons 
by *975» against earlier figures of 175m. 

The three main mines concerned 
are Goldsworthy, which produced 6ni 
tons last year and contributed 9% or so 
of the profit of Consolidated Gold 
Fields, owners of a third of the mine ; 
Mount Newman, whicJi produced 
5m tons and is 30% -owned by 
Broken Hill Proprietary (and contribu- 
ted about 20% of the profits) ; and 
Hamersley Holdings, which produced 
20m tons, and is 54% -owned by 
Conzinc ^otinto of Australia, 34% 
by Kaber Steel and the rest by the 
public. The opening of Hamersley's 
Paraburdoo mine has accordingly been 
postponed ; its output this year will 
be closer to 22.5m tons than the hoped- 
for 28m tons. 



81 



Hamersley conveyor : on the retreat 


Mount Newman has not yet 
announced any change in its »plans 
to raise capacity to 30m tons liy the 
end of this year, but the uncertainty, 
combined with a reduction in local 
steel production by B%-9%, has 
poured cold water on tti(> incipient 
optimism for BHP's immediate future. 
Profits from oil, $A22m of which 
first appeared last year, may go another 
‘$Aiom to the better, but not enough 
to offset the decline in both exports 
of iron ore and domestic production 
of steel. All the same, some analysts 
expect a net profit of $A8om in the 
year to May, compared with ^AGgtn 
last time — but even at a more realistic 
$A75m, BHP's p/c ratio, at $Ai2, is an 
expectant 23. Another difficulty in 
predicting the results is that there is 
some dispute over tiie way tax 
concessions arc treated. The auditors 
qualified the report last year and said 
that profits would have been $A 12.8m 
lower had consistent accounting 
principles been adopted. 

If there is a wariness about estimates 
for BHP it is nothing compared with 
the attitude to CRA. As well as the 
uncertainty about Hamersley, the 
aluminium producer Comalro is 
suffering from the worldwide glut, 
and the pioduction debut of Bougain- 
ville Copper has been clouded by 
suggestions that Japanese smelters will 
also ask for a 20% rut in the amounts 
tliey have contracted to take. The 
company has heard nothing officially 
from the Japane.se, but at a time when 
copper prices are so low even the 
suggestion of having to find a new 
market for 19,000 tons of copper a 
year is enough to give the market 'the 
jitters. 



39 


" rm tS, 


Lloyds &BolsaIntematio]ial Bank Limited. 
Extiacts from the first Report &Accoimts. 

Results for the Period Ended 30th September 1971 


The following is a summary of the Consolidated 
Profit & Loss Account taken from the first 
Report A Statement of Accounts of Lloyds A 
Bolsa International Bank Limited (I.B!) for the 
period ended 30th September 197L 
The figures have been produced on a full 
disclosed basis and the accounts have therefore 
been prepared without taking advantage of the 
exemptions granted to banking companies by 
j the Companies Acts of 1 948 and 1967. 

I Summary of consolidated profit and loss 
I account for the period ended 30th 
September 1971 

Profit before taxation 
Taxation 

Net profit available for 
distribution 
Dividends 

Special dividends paid 
by the merging banks 
prior to the merger: 

Bank of London & South 
America Limited 884,000 

Lloyds Bank Europe 
Limited 808,000 

Proposed first and final 
dividend at the rate of 
3.945p per share payable 
on 5th February 1 972 1,570,000 

Retained profit 4,345,000 

It is estimated that Ihc net proht available 
for distribution would be equivalent to about 
£8 million in a full year. This represents 20p per 
£1 ordinary share of LBI and on the gioup 
capital employed (at current vaiues) of £96 
million, an earnings rate after taxation of 
8.3 percent. 


consideration and fully provided for in the 
accounts. 

However, what has not been taken into 
consideration is the fall in the purchasing power 
of sterling; during the year ended 30th Septem- 
ber 1 971 , the U.K. consumer price index rose 9*9 
percent. Using this index, wc have made our 
own calculations of the effect of this inflation on 
shareholders" funds invested. 

Almost all companies suffer, of course, from 
the effects of inflation, although this is seldom 
remarked upon in the reports of U.K. financial 
institutions. We have felt that the effect of 
inflation has merited examination in two 
respects. The retention of sufficient profits to 
maintain the true worth of your investment 
is remarked upon later. The other problem is 
that whereas the fall in the sterling value of 
funds inve.sted overseas may be a good charge 
for United Kingdom tax purposes, no deduction 
is allowed in respect of the fall in the internal 
purchasing power of the pound sterling. This, 
as is well known, results in the tax charge in 
relation to real profits being very much higher, 
in percentage terms, than that fixed by Parlia- 
ment and calculated on the paper profits. 
Proposals for the reform of company taxation 
are now being considered by the Treasury; this 
is one obvious inequity which the new pro- 
posals could remedy. 

To illustrate the effects of this situation 
on the results now reported to you: 

£000's 

The profit before taxation 1 2, 644 

From this should be deducted 

the amount calculated as 

necessary to maintain the value 

of your investment in LBI in 

terms of current purchasing 

power 4,200 


£12,644,000 

5.169.000 

7.605.000 


The illusion of profits in conditions of 
inflation 

During the period covered by these accounts, 
many of the currencies of the countries in which 
the LBI Group operates lost value in terms of 
sterling; others, fewer in number, appreciated. 
This factor has, as usual, been taken into 


The profit before tax and 
extraordinary item, in terms of 
currency of constant value, 
therefore amounted to 8,444 

From this, tax must be deducted 5,169 


Leaving available 3,276 


In fact, the overall amount of tax, fixed by 
Parliament at a rate of 40 per cent, on paper 
profits becomes, when related to real profits, 
an effective rate of 61 per cent,, to which must 
be added the 38 per cent, income tax suffered 
by shareholders on dividends. The need to 
preserve the value, in real terms, of the capital 
employed is the principal reason for ouf, 
decision to pay a dividend of 3.945p for the 
period 10th May to 30th September, equivalent 
to an annual rate of 10 per cent, which is only 
fractionally above the 9.8325 pei cent, paid by 
BOLSA before the merger. We fell that the 
erosion of capital brought about by inflation 
called for caution and restraint in the matter 
of the dividend, if we are to retain the proper 
capital base for future growth, and it is hoped 
that shareholders will appreciate the point. 

Thus, despite some most welcome reductions 
in U.K. fiscal levels, your group remains under 
a heavy burden of direct and indirect taxation. 
Despite this burden, we have again made a 
substantial contribution to the “invisible*" 
export earnings of the City of London, and thus 
of the country as a whole. 

Satisfactory results 

The group’s South and Central American 
and Continental European branches, taken 
overall, produced satisfactory results. Income 
from sterling and foreign currency lending 
operations and foreign exchange business in 
London and Nassau made a substantial con- 
tribution to the results now reported. 

The Investment Banking division, reorgan- 
ised in 1970, was able in 1971 to generate 
considerable profits from its dealing operations 
in securities. The international financing 
services of the Balfour, Williamson group and } 
the investment banking and insurance sub- 
sidiaries continued to make satisfactory con- 
tributions to the group profit. 


Salient figures from consolidated 
balance sheet 

Authorised capita) £50,000,900 

Issued capital and reserves £90,482,000 
Deposit, current and other 
accounts £1 ,461 ,430,000 




THE ECONOMIST JANUARY 15, I979 


83 


future Prospects in a World of Change and Challenge 


^^Flexibility; the key to LBI success'\ 
says Chairman, Donal S.A. Carroll. 

The new bank. Lloyds & 3olsa International, 


successfully to take up many new challenges. 

An enlarged Community will not only 
expand its own internal trade but will be a key 
agent in the growth of trade with both the 
industrialised and the developing nations of the 


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84 


THE ECONOMIST JANUARY 1 5 , I972 


Unit I rusts 


Ybs, but don*t just dive in blindly 


'Many itwspapers are advising their 
readers to buy unit trusts because the 
stock market looks good for the next 
year. Our own guess is that the market 
is more than halfway through its bull 
phase. Anybody who comes into unit 
trusts now should either stand ready 
to sell when the market shows signs 
of going bear — or be prepared to hang 
on until the next bull market comes 
round. 

The chart shows how horribly mis- 
guided the small saver rx^niains : he 
buys too late and sells too early. Last 
year, when the average unit trust 
showed a growth of capital and income 
of 41.3%, icw) many unitholders sold 
halfway up the staircase, as soon as 
their investments had at last got back 
up to the price at which they were 
purchased at the tail-end of the 1968-69 
bull market. It will be a misfortune if 
small savers now flock back in great 
profusion in the later part of the 
1971-72 bull market, only to be dis- 
illusioned again. This time there is the 
additional danger of too many l^eing 
lured into the fashion of property- 
bonds in exactly the way that some 
were lured into unit trusts in 1968-69. 

There are now 263 unit trusts in 
Britain which are analysed for our 
quarterly tables, shown below'. I’hey are 
a very average collection of invest- 
ments. Over most time-spans about 
half of them beat the Financial I’inies 


Actuaries all-share index, and about 
half do worse. But winners over one 
year are very often losers over two or 
more years. There have been no 
ab.solutely consistent star performers, 
although there have been rather too 
many consistent losers. The new unit- 
holder, who wants a safe ride, with the 
expectation that his savings will be 
protected against inflation in the long 
run, should choose a trust that has 
done a bit better than the market most 
years : the more adventurous might try 
testing the law that what goes down, 
but has not usually in the past stayed 
down, comes up. 

In the short run, some trusts can, 
and do, out-perform the market hand- 
somely. This is due to a variety of 
factors, including luck. The top of any 
short-term league is bound to contain 
specialists which happen to be com- 
mitted to the right sector at the right 
time. '1 here will also be a number of 
new trusts that started operations when 
a market trend was already underway ; 
and usually a predominance of small 
trusts which can be adjusted more 
flexibly to changing circum.stanc^s. But 
luck and specialisations can work both 
ways, and flexible little trusts become 
less flexible big trusts (because that is 
naturally often their managers’ aim). 
Short-tenn tables do have their point : 
they highlight new talents in the 
business ; they show the cflFccts of 


UNIT TRUSTS 

(Left-hartd scale) (Righi-hand scale) 



Jan 7 1970 » 100 
130 

120 

110 

100 

90 

80 




management changes ; and they 
emphasise recent influences on unit 
trust prices generally. 

I'his year, for example, our table 
showing performance in the year to 
December 31, 1971, vividly reflects 
the boom in second-line stocks and 
long-cherished recovery situations. 

A lot of the funds in the top 20 
are either specifically oriented in this 
direction — like Oceanic Performance, 
Slater Walker Assets and M&G 
Recovery — or have adopted a similar 
investment approach : they were often 
trusts that went for high yielding 
(and therefore supposedly “risky”) 
domestic shares during the 1969-70 
recession. In 1971 high yielders turned 
into growth stocks as well. They will 
find the going harder in 1972. 

A good example is Scotincome, 
whose successful selection of obscure 
recovery stocks has won it a place in 
both the one- and three- vear tables. 
The bull market has brouglit back two 
trusts to the one-year table from the 
Surinvest Group. High speed dealing 
in special situations was always the 
forte of its mastermind, Mr John 
Ormond, hero of the 1968 bull market 
— but subsequently smitten by the 
trials of Job when the bear market 
came. In 1971 he has hauled Surinvest 
Performance from the bottom to near 
the top of the charts ; Surinvest Future 
Income Fund, which contains many of 
the same stocks, is up there with it. 
Surinvest’s ill-fated Raw Materials 
Fund has l>een handed over to a new 
money manager, ex-journalist Mr John 
Coyne, to manage as a growth fund ; 
he has handily supplied his own name, 
in place of the Surinvest label, clown 
there near the bottom of the one-year 
table. 

The one-year table also spotlights 
the success to date of the Portfolio 
Management group, whose trusts — 
such as Portfolio Growth with Income 
— have been up with the leaders since 
they started in 1970. The group’ls 
system is to hold concentrated port- 
folios — perhaps 30 or so closely studied 
Shares — and to indulge in a Chinese 
system of self-criticism for managers 
whose shares fail to make their objec- 
tive of 25% growth in a reasonable 
time. The trusts are an advertisement 
for the group’s business of offering 
management for personal portfolios. 
Thus they get a lot of attention, and 
probably will not be allowed to grow 
too big. 

The leader in the one-year table — 
the only trust actually to double its 
value in iqyi-^is Oceanic Perform- 
ance ; its success has pulled it trium- 



BC©KbIttit JA»UA^^ UNltTOOSTS 8$ 



Three-year wirmers : Jessers St Giles, Oceanic* s Lee, Targets Chancellor, Scotbits* de Vink 


phantly from a lossmaker into second going in view of their relatively large now, but may be shrewd for the future, 

place in the three-year table as well, size and conservative investment M&(i\s Midland and General has 

it is one of the eight ex-Hodge trusts approach. Clyde General and Discrc- an inevitable regional concentration on 

which have come to rest and recover tionary are two good examples of the engineering sector ; it currently has 

at Triumph Investment Trust under trusts which plod conservatively and 27% of the fund in it, and this is an- 

the new Oceanic banner. Mr Leonard solidly on over the long-term, with a other unfashionable mixture that could 

Lee is noted for turning over the generally better than average perform- pay off in 1 972. 

Oceanic Performance portfolio two or ance but without ever hitting the high The long-awaited recovery in the 
three times a month. His less aggres- spots. United States should at last mean some 

sivc Oceanic Financial Fund is also Two interesting trusts appear in both changes at the bottom of the tables, 
well up the one-year tabic, and Oceanic lists. One is Ebor General : despite the where the American specialists still 

Recovery was not all that far out of name, it is a recovery' fund but held feature so prominently in both the 

the top 20 there. up relatively well in the bear market, one-ycar and three-year lists. It is 

The two Barclays funds have marked The managers, Ivory and Sime, pursue disappointing to see Shield down there 

up solid long-term achievements ; a contracyclical policy — ic, they go with them ; this is a glum performance 

Unicom Income also made it to the for .share.s which nobody else wants, by a middle-of-the-^road fund which 

onc-ycar list, and Unicom 500 only The trust’s 28% sta^'c in the capital u^ to be the star performer of the 

narrowly missed it. This is very good goods sector may seem unfashionable National Group’s stable. 

Best and worst growth records among unit trusts on an offered price basis to December 31, 1971, net-of-tax 
income reinvested. No account taken of capital gains tax paid. 


Top 20 over three years Top 20 over one year 


Trust 

Group 


Growth 




Trust 

Group 

Current 





over 






size 

Growth 



Current 

three 

Growth 

Growth 

GrowU) 



£m 

% 



size 

years 

1971 

1970 

1969^ 







Cm 

% 

Vo 

% 

7o 

Oceanic Performance Oceanic 

0.6 

102.9 

Jessel Property 







Surinvest Future 




& General 

Jeasel Britannia 

9.0 

87.4 

59 5 

17,0 

0.4 

Income 

Surinvest 

0.4 

91.5 

Oceanic Performance Oce.mic 

06 

79 1 

102.9 

- 6.0 

-18.2 

Portfolio Gruwth 




Target Financial 

Target 

11 4 

61.5 

583 

10.3 

- 7.5 

with Income 

Portfolio 

03 

80.6 

Ebor Properly & 







Ebor Property & 




Building 

Ebor 

07 

60.9 

77.1 

5.3 

-13.7 

Building 

Ebor 

0.7 

77 1 

Financial Priority 

London Wall 

1.3 

50.4 

57.8 

8.3 

-12.0 

Slater Walker Assets 

Slater Walker 

73 

73.6 

Scotincome 

ScotbiTs 

55 

492 

71.7 

- 3.8 

- 9.7 

High income Priority London Wall 

95 

73.5 

Ebor General 

Ebor 

2.8 

47 0 

65.8 

- 1.8 

- 9.7 

Oceanic Financial 

Oceenic 

1.4 

73.0 

Jessel income 

Jessei Britannia 

39 

43.2 

56.3 

10 9 

17.4 

Scotincome 

Scotbits 

5.5 

71.7 

Raw Materials & 







Surinvest 




General 

Janus 

27 

42.9 

42.7 

10.9 

- 9.7 

Performance 

Surinvest 

25 

71.1 

Schroder Income 

Schroder Wagg 

6.6 

41.1 

41 8 

3.0 

- 3.4 

Tyndall Ulster 

Tyndall 

0.5 

70,2 

Unicorn 500 

Barclays Unicorn 

13.4 

39 7 

61.6 

- 2.1 

-12.7 

Talisman 

L S Fund 

07 

67.8 

M&G Midland & 







M&G Midland & 




General 

M&G 

5.0 

38.7 

67.4 

08 

-17.8 

General 

M&G 

5.0 

67.4 

High Income Priority London Walt 

9.5 

37.7 

73.5 

- 2.5 

-18 6 

Ebor General 

Ebor 

28 

65,8 

Castle Extra Income 

Jessel Britannia 

10.2 

37.3 

45 0 

7.7 

-12.1 

Stater Walker High 




Brondt'a Income 

Brandt's 

0.8 

35.5 

43.2 

3.1 

- 8.2 

Income 

Slater Walker 

4.8 

65.0 

Discretionary 

Discretionary 

2.0 

35.0 

54.2 

3.7 

-15.6 

Portfolio Capital 

Portfolio 

1.0 

64.4 

Unicorn income 

Barclays Unicorn 

19.4 

33.1 

62.2 

0.1 

-18,1 

Target Consumer 

Target 

20 

64.2 

Clyde Genarel 

M&G (Scotland) 

1.1 

33 0 

43.7 

5.9 

-12.6 

M&G Recovery 

M&G 

2.0 

63.4 

Jeeael City of 







S&P Japan Growth 

Save & Prosper 

34 

63.1 

London 

Jessel Britannia 

1.4 

32,7 

58.6 

4.1 

-19.6 

Abacus Giants 

Abacus 

0.6 

62.9 

Abacus Income 

Abacus 

1.6 

32.5 

61.3 

4.5 

-16.2 

Unicorn Income 

Barclays Unicorn 

19.4 

62.2 

FT«Aetuaries •ll-ahare (income reinveettd) 


19.2 

43.4 

- 4.9 

-12.6 

FT-Actuarlas all-share (income reinvested) 


43.4 

Bottom 10 over three years 






Bottom 10 over one year 



Vavasseur int 











Mining 

Vavasseur 

1.2 

-15.9 

- 6.7 

~ 4.7 

— 

Shield 

National 

19.0 

12.2 

Jeasel Gold & Gen 

Jeasel Britannia 

4.5 

-17.3 

2.1 

- 9.1 

-10.9 

Hill Samuel Int 

Hill Samuel 

14.1 

9.9 

London & Wall 











Street 

London Wall 

2.3 

-18.8 

25.4 

-12.7 

-25.8 

Securities of America 

Allied-Hambro 

1.2 

61 

Hill Samuel Int 

Hill Samuel 

14.1 

-19.3 

9.9 

-17.2 

-11.3 

Metals Minerals and 




Vavasseur Oil & 







Commodities 

Allied-Hembro 

11.3 

6.7 

Energy 

Vavasseur 

4.4 

-19.4 

16.6 

-15.3 

-18.4 

Oceanic Overseas 

Oceanic 

1.1 

4.6 

Oceanic Overseas 

Ocaianic 

1 7 

-21.6 

4.6 

-23.6 

- 19 

Jessel Gold & Gen 

Jessel Britannia 

4.5 

2,1 

Motets Minerals & 











Commodities 

Atlied-Hsmbro 

11.3 

-26.7 

5.7 

-18 8 

-13.4 

Oversees 

Mallet 

2.4 

1.7 

Hill Samuel Dollar 

Hill Samuel 

3.6 

-26.0 

13.6 

-164 

-22.3 

Coyne Growth 

Surinvest 

t 

- 2.1 

Ovarseaa 

Mallet 

2.4 

-32.8 

1.7 

-29.2 

- 6.7 

Vavasseur Int Mining Vavasseur 

1.2 

- 6.7 

Secui'itfei of America 

Atlied-Hambro 

1.2 

-36.8 

61 

-21.0 

24.6 

Pan Australian 

Southern Cross 

11 5 

- 7.0 


hsnkingi $upptf§d by FuAtfix 

Cwrant she Mtistics supptl§d by G. S. Herberr fSxtoiv £100.000 



86 


THB iBooMDiiiaHr jAnvary i§ja 


APPOINTMENTS 


The University of Manchester 

Investigational Officer or Senior Investigational Officer 

The Unlv^^rslty Invite* applications for this post in the Research 
Support Unit of the Faculty of Economic and Social Studies. The 
person appointed will be responsible to tlie Dean for settlni; up, and 
supervising the operation of, a branch of the Research Support Unit 
dealing with the collection, sorting and processing of Economic and 
Social data. The successful applicant should have a good honours 
degree In Economics or a closely related subject, and. Ideally, have 
post-graduate experience involving the use of published or un-publishcd 
Economic Statistics. Some knowledge of the use ol conumtors for the 
storage, processing and retrieval ol data would be useful and u 
successful applicant nai having such knowledge would be expi'cted to 
acquire it. Salary ranges : investigational Officer i;i,248-£1.695 t> o . 
Senior Investigational Officer £l,902-£3,003 pa. FS.SU. Particulars and 
application forms, returnable by January 31st. from the Registrar, The 
University. Manchester M13 9PL. Quote ref . 224 71 E 


CHAIRMAN’S STATEMENT 


SERCKUMITED 


1971 REPORT 


Salient points from the Review by 
Mr K. M. Leach, C.B.E, the Chairman, circulated to 
shareholders with the Annual Report and Accounts 


Sales were 

1971 

rooo 

29,800 

1970 

€V00 

25.700 

Profit before tax is 

2,510 

1,605 

The profit is being used 
to pay taxes 

1,080 

742 

to pay debenture issue expenses 

75 

— 

to pay dividends (if approved) 

612 

459 

retained In the business 

743 

404 

The dividend recommended is 

8% 

6% 

Capital employed is 

18,000 

17,000 

Earnings per share ore 

4.7p 

2.8p 


We are encouraged by the progress achieved in 1971. The 
improvement in the performance of the Group is substantial. 
Mr R. G. Martin was appointed a non-executive Director in 
December 1 971 . 

Prospects: Profit in 1971 was 16% of capital employed 
which compares well with trie engineering industry as a 
whole. However, we consider it still insufficient for a 
progressive company and our object is to raise this percentage. 
In 1972 we face two important factors partly outside our 
control : whether, with the present demand for capital goods 
a sufficient volume of orders can be maintained; and 
whether, having signed the C.B.I. Price Restraint Under- 
taking. we can hold costs, particularly materials, salaries and 
wages to appropriate levels. 

Nevertheless, on present evidence we expect to report 
another increase in profits in 1 972. 


8EIICK LIMITED^ P.0, BOX NO: 8988, WARWICK ROAD, 
BIRMINGHAM 811 2QY. 


BRITISH 

ENRALON Limited 


^RKET RESEARCH DEPARTMENT 

Market Analyst 

The position involves the collection, preparation and inter- 
pretation of textile market statistics within a dieiveloped system. 
Additionally, the function encompasseis the forcast support given 
to the company's dlviisions and corporate management. Despite 
having a high numerate content, the position la not seen as being 
deskbound. Involvement with the U.K. Textile Industry and 
with our European parent enmpany, AKZO, will be necessary. 

The successful candidate is likely to fall within the 24-28 
age group, possesis a degree incorporating statistics and to have 
had sudiclent market research Involvement to appreciate Its 
contribution to a developing Company. Experience within the 
Textile Industry would be viewed as a distinct advantage 

The position is based at the company’s headquarters in 
Leicester and the salary will reflect the qualifies lions and 
potential of the .successful candidate. 

Curriculum vitae, marked " Private and Confidential *' 
should be Acnt to . 

P. D. Mulllner, Market Research Manager, 

British Enkalon Limited, Enkaloa House, 

Regent Road, Ixilcester, LEI 9AF. 



MAN-MADE FIBRE PRODUCERS 


INSTITUTE OF DEVELOPMENT STUDIES 

at the University of Sussex 


DIRECTOR 


The contract of the present Director (Mr Dudley 
Seers) expires in mid-1972 and the Governing Body 
invites applications for the vacant post from men and 
women of any nationality. 

The Institute, which is an autonomous national institu- 
tion, located at the University of Sussex, was established 
in 1966 to carry out research, teaching and advisory work 
in development studies. It is continuing to expand and 
expects substantially to increase its present size by 
1975/6. 

The Director, who should have proven administrative 
ability, a professional reputation in a social science and 
experience of developing countries, is responsible for 
the administration and the academic work of the 
Institute. The successful candidate will be appointed on 
contract normally for five years, with other terms and 
conditions (including F.S.S.il ) similar to those which 
apply to senior posts in UK Universities. 

The salary of the post will be negotiated with the 
successful candidate but on present university scales 
will not be less than £6,000 per annum. A Director's flat 
is available in the Institute building, for which a rental 
contribution is payable by the Director. 

Further particulars are available from the Administrative 
Secretary, Institute of Development Studies at the 
University of Sussex, Falmer, BRIGHTON BN1 9RE« 
Sussex. All enquiries will be treated in strict cbnftdence. 

The closing date for applications is 2(9.2.1872, 




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88 


IHE taONOMtST JANUARY J5, 1972 


APPOINTMENTS 


The University of 
Manchester 
Institute of Science 
and Technology 


DEPARTMENT OF 
MANAGEMENT SCIENCES 

Researth Fellow in 
Marketing 

Th« U.M.1.S T. Deparlment of 
Managemenif^ SclenceB Is one 
of the oldest and largest 
centres of Mnnagement educa- 
tion in the United Kingdom, 
embracing a substantial re- 
search school engaged upon a 
variety of Industry sponsored 
research projects , 

AppUoations are Invited for 
the above vacancy from 
suitably qualified graduates lit 
Economics, fitatlstlcs and Oper- 
ational Research, with some 
research experience. 

The successful candidate will 
become a member of a team 
engaged upon a marketing re- 
search project associated with 
a substantia] Oroup of 
Companies engaged in the 
British Steel Castings Industry 
The project team Includes a 
number of members of sralT 
and Is associated wlUt Professor 
Roland Smith, Carnnglon- 
Vlyella Professor of Marketing 
at U.M.LS.T. 

The Research Fellowshlj} 
appointment will be for three 
years. 

Commencing salary will be 
in the Lecturer Grade : £i,4Ui- 
£3,417 per annum, wiUi 
Superannuation under F.6.».U. 

Requests tor application forms, 
quotinj; Kefcrencc number 
MS/ 2/ AD should be made to 
The Registrar, U M.I.S.T., Sack- 
vlUe Street. Manchestci , M60 
IQD, to whom ounipleted lorins 
should be roiurned by . 31st 
January, 1972 


University of 
Strathclyde 


Postgraduate Study 

POLITICS 

Enquiries are invited from final 
year undergraduates and others 
interested in post-graduate 
study in the Strathclyde de- 
partment The department 
ofirrs ooutses and supervision 
for the M.Sc and Ph I) 
degrees Applicants are eligible 
for SSRC Quota Awards 

Details from PROFESSOR 
RICHARD ROSE. McCance 
Building, (Jiuverslty of Stratli- 
clyile, Richmond Street. Glas- 
gow, G1 IXQ 


Economics 

Simplified 


Economics made easy at tiie 
ESSRA School of Economic 
Studies Evening classes at 
Victoria begin January 25 & 27. 
7pm 

Subjects include . Economic 
dellnltlons. Basic economic 
principles. Inflation. Employ- 
ment, Wages, Prices, Taxation, 
Subsidies I no previous know- 
ledge assumed) Twelve- week 
course £2, all materials sup- 
phed 


Specific courses on Interna- 
tional Trade, The Classical 
Economists and Currrnl Econo- 
mic Theories are available os 
folluw-on courses 


Write or telephone for pros- 
pectus to T'he Secretary. 
Economic and Social Science 
Researcli Association. 17? 
Vauxnall Bridge Road, SWl 
Tel . 01-834 4266/4979 


Institute of Development Studies 

»t the 

UNIVERSITY OF SUSSEX 
Fellowships 

The Insititute, an aotonomous national centre In the first year of 
Its second quinquenmum. is continuing to expand its work, iocustng 
especl^ly on unemployment and iiieonic distribution Applications are 
invited from those with oversea}, pxneneiire, who accept the desirability 
of an IntenllflCipllnary approach Ui <he orofclems of the less developed 
countries, and have prolewloiial expertise in one of the following 
areas : 

Economics (4 posts) 

*Macro-economic planning , project analysis . decision-making , the 
management of public enterprises. 

International trade with special reference to technology transfer 
Mechanisation of agriculture 
Wages policy ; distribution. 

Sociology 

Rural development : land tenure. 

Political Sociology /Education 

Education (especially content, selection and cost). 

Fellows are appointed on contract with terms and conditions similar 
to University appointments Their work includes research, post-graduate 
teaichlng and consultancy 

Further psrtlcuJars are available from the Administrative Secretary, 
Institute of Development Studies at tlM University of Sussex. Falmer, 
BRIGHTON BNl 9RB, Sussex. (Please speoUv the post for which 
application is being made.) 

*■ prevlousiy advertised. 


Co-Operative 

College 


STANFORD HALL, LOUGH- 
BOROUGH, LEICESTERSHIRE. 
IiB12 5QR. 


Social Studies : 

Adult Residential Courses 


Applications are invited for 
places available at this adult 
residential College for session 
beginning October. 1972. 


Courses in SOCIAL STUDIES 
for UNIVERSITY OP NOT- 
TINGHAM DIPLOMA and 
Course for DIPLOMA in 
CO-OPERATION. 


Full details of grants avail- 
able, conditions of entry, etc. 
available from the Administra- 
tive Officer. 


Applications must be received 
by 12th March, 1972. 


Victoria University 
of Wellington 

NEW ZEALAND 

Lectureships in Economics 

AppUcatlons are Invited from 
suitably qualified persons for 
two lieotureships in Economics 
Any field of specialization will 
be considered, but for one of the 
posts some preference will be 
given to an applicant with 
special Interests in the areas 
Mathematical Economics or 
Econometrlcs/Sitatisucs 

Salary Scale : $NZS123 to $6653 
p a. Superannuation is avail- 
able on an FSSU basis and an 
allowance is made towards 
travel and removal expenses 

Further particulars and in- 
formation on application pro- 
cedure 18 available from the 
Association of Commonwealth 
Universities (Appts), 36 Gor- 
don Square, Ijonrion. WCIH 
OFF (Tel : 01-387 8572) 


Applications close on 28 Febru- 
arv 1972. 


University of Kent 
at Canterbury 


CENTRE FOB RESEARCH IN 
THE SOCIAL SCIENCES 


Nature and Effects of 
Travel Unreliability 


Applications are invited for 
a post of Research Fellow, 
tenable for a period of one 
year to work on the above 
project— salary £1491 p.a. 

Applicants, who should be 
qualified in Economics and/or 
Statistics and preferably have 
an interest in Transport 
Economics, bhould be able to 
start work as soon as possible 

Further particulars and 
application lorins may be 
obtained from Mr. J E Reilly, 
Cornwallis Building, The 
University, Canterbury, Kent 
Completed applications (3 
copies) should be received not 
later than Friday. 28th 
January, 1972 (Quote Al/72> 


University of 
Cambridge 


University of 
Stirling 

DEPARTMENT OF 
ECONOMICS 

Lecturer /Senior Lecturer 
in Economics 


Applications are invited for 
several posts in EconomiCH 
resulting from the Depart- 
ment’s expansion One or two 
of these appointments may be 
made at the Senior Lecturer 
level, There is no restriction 
on candidates* special field of 
interest. 


Salary on scales : Lecturer- 
£1491 to £3417 and Senior 
Lecturer- £3597 to £4401 both 
scales plus FSSU (both subject 
to review') Placement will be 
made according to age. 
qualifications and experience 
The appointment will run 
from 1 September 1972 


Further particulars from the 
Deputy Secretary (EC). 
University of Stirling, Stirling, 
to w'hom applications with the 
names of two referees should 
be sent by 31 January 1972. 


DEPARTMENT OP APPLIED 
ECONOMICS 

Computer Programmer/ 
Statistical Analyst 


Arts Council of 
Great Britain 


Applications are Invited for a 
post In the field of computer 
(iata-processing and atatlsaical 
analysis on the research atofi 
of the Deparlment of Applied 
Economics, Universltv of Cam- 
bridge. The BucceesJul candidate 
W'lll be expected to ossivt In the 
analysis of econometric and 
sociological data ; to become 
fully conversant with existing 
computer facilities and comput- 
ing requirements : to assist in 
the development of programs 
and fa'dllttes on tne new 
IBM 370/165 computer ; and to 
help and advise research staff in 
the use of these facilities. 

Applicants should normally 
have a good degree or equiva- 
lent qualification. 

Grade and salary in the 
range £1.347 to £3,727, will 
depend on qualifications, age 
and experience. 

ApplloaUons. together with a 
curriculum vitae and the names 
of two referees, must reach The 
Administrative Secretary, De- 
partment of Applied Economics. 
Bldgvlck Avenue. Cambridge. 
CBS 9DE. not later than 9 
February. 1073. 


Information Officer 


The person appointed to this 
new post will be responsible, 
under the Secretary-General, 
for developing and co-ordinating 
the Arts CouncH’s publicity 
and information services, both 
to the public and to grant- 
aided bodies, covering the 
whole range of Its activities. 

Duties will Include the prepar- 
ation and preaen^Atlon cl 
material for the press, radio 
and televlglon, A major part 
of the work will be the 
handling of publicity arrange- 
ments for the Councirs art 
exhibitions at the Hayward 
Gallery and elsewhere In 
London and the provinces, and 
it U desirable that applicants 
should have some prior 
experience in this field. 

The salary wtll be within the 
scale £3.425-£4,575 per annum. 
A non-contributory pensiion 
scheme is provided. 


Applications should be 
addressed to the Secretary- 
General. The Aril Oounoll ol 
Orest Britain. 10a, PiceadiUy, 
London WiV QAU and should, 
be submitted not later than 
4th February. 1072. 


THE ECONOMIST JANUARY I5, 1972 


89 


APPOINTMENTS 


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Tolophono JEJ Johnson 01-930 5155 


The University of 
Manchester 
Institute of Science 
and Technology 

DEPARTMENT OF MANAGE- 
MENT SCIENCES 

International Business 
Unit 

Research Fellow 

The UMIST Department of 
Manaaemcnt Sciences Is one 
of the oldest and largeat 
centres of Management educa- 
tion in the United Kingdom 
Its Research School Includes 
the International Business 
Unit, financed jointly by the 
S S R.C. and industrial Com- 
panies, to study a range of 

e roblems within International 
iiislness. 

Applications are invited for 
Uie above vacancy from suitably 


Economies professor or advanced 
lively student who has 
Bpeclallsed In the effecta of 
taxation on Capital growth 
and the merits of Tax 
Haven " wanted to write a 
series of articles on this 
theme. Apply tu Box No. 2493. 


qualified graduates In the basic 
dlBciplinea appropriate to 
Management Sciences. with 
some research experience, 

The successful candidate will 

S LOUse in the development 
ivestmelit appraisal criteria 
special reference to the 
European Retailing Induslry. 
but as an integral meml)er of 
the International Business Unit, 
he will be expected to make a 
contribution beyond his apecial- 
1st area 

The Research Fellowship 
appointment will be for one 
year, in the first instance. 
Salary will be £2.00U pci 
annum, plus expenses for travel 
In Europe. Superannuation 
under P.8 S.U. 

Requesta lor application 
forma, quoting Reference num- 
ber MS/ 3/ AD should be made 
to The Registrar, UM.IST., 
Sackville Street. Manchester. 
M60 IQD. to whom completed 
forms sliould be returned by 
3l9t January. 1972. 


Oriel College 

OXFORD 

The College proposes to 
appoint a fulNUmc lecturer In 
economics from 1 October 1072. 
Particulars may be obtained 
from the Provost, Oriel 
College, Oxford. to whom 
application should be made 
not later than 5 February, to- 
gether with the names of three 
referees and a curriculHtn vitae. 


Brighton 

Polytechnic 

Lecturer in Economics, 
Grade I/II 

Applications are invited from 
Economists. wiUi apecial inter- 
est in the quantitative field of 
Economics, lor a post which 
provides opportunities for work 
with a range of CNAA degree 
oourses, including courses in 
Business Studies, Building and 
Management and Computing 
Scienct*. 

Salary Scales : Lecturer 1 
£1,375 -£2.355 plus 2 x £76 for 
good hon degree. Lecturer 11 
£2.195— £2.875. 

Further details and application 
form (returnable by lat Feb- 
ruary) from: The Bursar. 
(S 4/1). Brighton Polytechnic, 
Moulsecoomb. Brighton. BN2 
40J. 


Portsmouth 

Polytechnic 

Lecturers in Economics 

The Department of Econ- 
omics has two vacancies for 
lecturers U> assist iii the 
teaching of economics to BSc 
(Econ) London and C N.A A 
degrees. Candidates must be 
welt qualified, preferably with 
experience of degree level work. 
They should staUj their 
specialist teaching and research 
interests. In one post prefer- 
ence will be given to a candi- 
date with a special interest in 
monetary theory and institu- 
tions who can start on 1st 
April, 1972. or soon after that 
date 

Appointments will be at 
Liecturer Grade I or IT level 
depending on quallflcoAions and 
experience. 

Salary scale * Lecturer Grade 
I £l,535-£2.507 per annum . 
I.«cturer Grade II £2,195-£2.B75 
per annum. 

Application forms and further 
particulars may be obtained 
from the Staff Officer, Ports- 
mouth Pol.vtechnlc, Ravelin 
House. Alexandra Road. Ports- 
mouth POI 2QQ. to whom 
completed applications should 
be returned by 24th Jaduary, 
1.972. Please quote reference 
G.12 


STHTISTItinnS 

scope for uiork uiith social and environmental prnblems 


A$ a member ot the Government Statistical Service, you will 
have the opportunity of working in multi-discipline teams 
on projects carrying a high degree of importance in the 
social policy-making areas. You will be called on to use your 
training and expertise to devise and carry out special social 
surveys and analyses